Sugar prices rise as India's ethanol push strains cane supplies

Sugarcane is the feedstock for much of India's ethanol, which the government wants blended into fuel at higher rates to cut oil imports. The Russia-Ukraine war and Gulf instability accelerated the push, but the trade-off has never been modelled in a way that accounts for food demand. The Mint Editorial Board noted that market simulations could have flagged this conflict earlier.

One overlooked factor is that motorists might actually pay more for lower-ethanol blends. If demand patterns were given a role in what filling stations offer, the pressure on sugar supplies would ease. The board argued for a review of blending targets with domestic food consumption taken into account.

The immediate risk is that sugar imports become a regular fixture, reversing India's self-sufficiency in the sweetener. Stock limits and a higher support price buy time. They do not solve the structural conflict between fuel and food demand for cane.