Ethanol, Sugar Prices And Drought: Why Maharashtra’s Farmers Are Protesting

Thousands of sugarcane farmers in Maharashtra have taken to the streets, demanding higher prices for their produce and government intervention to address a deepening crisis in the sugar industry. The protests, which have spread across western and southern Maharashtra and parts of north Karnataka, centre on the minimum selling price (MSP) of sugar, ethanol procurement policies, drought-related losses and the cost of early sugarcane crushing.

On October 25, thousands of farmers joined a 185-km bike rally led by Raju Shetti, former Lok Sabha MP and president of the Swabhimani Shetkari Sanghatana, across major towns in Maharashtra's Kolhapur district.

The farmers are demanding a first instalment of Rs.4,500 per tonne of sugarcane, a higher MSP for sugar and a ban on ethanol imports, among other measures. Their eight-point charter also seeks financial relief on sugar factory loans and direct subsidies to compensate for losses.

The rally's scale has renewed attention to the financial pressures facing sugar mills and farmers, with protesters arguing that government policies are worsening an already difficult situation.

Why Are Sugarcane Farmers Protesting?

The immediate trigger is the growing financial pressure on Maharashtra's sugar industry, which farmers say has been compounded by government decisions on sugar prices, ethanol procurement and the timing of the crushing season.

The Swabhimani Shetkari Sanghatana has been leading the agitation, with farmers' organisations across Maharashtra and north Karnataka protesting for around six weeks.

At the centre of the dispute is the gap between the price mills receive for sugar and the cost of procuring sugarcane from farmers.

The government has fixed the MSP of sugar at Rs.31 per kg, while the fair and remunerative price (FRP) of sugarcane stands at Rs.3,650 per tonne. According to the farmers' side, the disparity leaves the sugar industry facing a direct loss of around Rs.550.

Farmers are demanding that the sugar MSP be raised to Rs.50 per kg to help mills meet their costs and pay better prices for cane.

In a letter to Prime Minister Narendra Modi, Shetti urged the Centre to intervene to protect the industry. He has also criticised the government's ethanol procurement decisions, arguing that they undermine a sector that policymakers had previously sought to support through ethanol blending.

How Has Ethanol Procurement Become A Major Issue?

Ethanol has become an important part of the sugar industry's efforts to diversify its revenue and reduce its dependence on sugar sales.

The Centre's ethanol-blending programme, which involves mixing ethanol with petrol, was intended to create an additional market for the industry. Sugar mills invested in ethanol production capacity, including facilities that use sugarcane juice, sugar syrup and B-heavy molasses as feedstock.

However, farmers' organisations say the industry's investments are no longer translating into the expected returns.

The share of ethanol that oil marketing companies (OMCs) were expected to procure reportedly fell from 60 per cent in 2018 to around 26-27 per cent in 2025.

Maharashtra's sugar mills developed an ethanol production capacity of 396-424 crore litres, but OMCs procured only 36 per cent of that capacity, according to the figures provided by the industry.

The latest procurement tender, issued on October 16 by five state-owned OMCs, sought approximately 11 billion litres of ethanol for the November 1, 2026, to October 31, 2027, supply period. However, following directions from the Union government, the tender excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses.

The decision has put mills that invested in these production processes in a difficult position.

Of Maharashtra's 210 sugar mills, 121 have installed ethanol plants, while another 32 direct distilleries produce ethanol from sugar syrup or B-heavy molasses.

Farmers' representatives estimate that Maharashtra's sugar industry could face losses of nearly Rs.7,000 crore as a result of the procurement restrictions.

Shetti has accused the Centre of undermining the cooperative sugar industry, arguing that mills invested in ethanol production in the expectation that it would provide an additional source of revenue.

Why Are Farmers Opposing Sugar Imports?

The dispute over ethanol has coincided with the government's decision to permit duty-free imports of raw sugar to contain rising domestic prices.

In August and September, retail sugar prices reportedly climbed to Rs.68-75 per kg. With consumption typically increasing during the festive season, the Union government allowed the duty-free import of one million tonnes of raw sugar on August 20.

The deadline for these imports, initially set for October 31, has since been extended to December 31.

The decision has angered farmers' organisations, which argue that importing sugar while restricting ethanol procurement puts additional pressure on domestic producers.

Their concern is that mills could struggle to sell their sugar at remunerative prices while also losing an important revenue stream from ethanol.

In his letter to Modi, Shetti argued that the combination of duty-free sugar imports and restrictions on ethanol procurement threatened the survival of cooperative sugar mills.

The farmers are demanding a ban on ethanol imports as part of their eight-point charter, alongside a higher sugar MSP and changes to the domestic procurement policy.

How Have Drought And Early Crushing Added To The Crisis?

The financial strain on the industry has been compounded by drought conditions in Maharashtra, which have affected sugarcane quality and sugar recovery.

Sugar recovery refers to the amount of sugar extracted from a given quantity of sugarcane. According to the figures cited by farmers' representatives, recovery has fallen by around 1.5 percentage points, with a mill that previously extracted 12 kg of sugar from 100 kg of cane now obtaining approximately 10.5 kg.

Lower recovery means mills produce less sugar from the same quantity of cane, putting further pressure on their finances. At the same time, inflation has increased crushing costs.

The Maharashtra government asked sugar mills to begin crushing on October 15, almost a fortnight before the regular start of the season, amid rising retail sugar prices.

The Swabhimani Shetkari Sanghatana called for a 'Stop Work' protest against the order, arguing that early crushing would force mills to process immature sugarcane.

Farmers' representatives estimate that premature crushing could reduce recovery by around 1.5-2 per cent. They argue that the problem is particularly serious in a drought year, when cane is already drier than usual.

Shetti has questioned how cooperative mills and their farmer-owners can remain financially viable if they are required to begin crushing early while facing lower recovery and restricted ethanol sales.

What Are Farmers Demanding From The Government?

The farmers' eight-point charter calls for changes to sugar pricing, ethanol procurement and financial support. They want the sugar MSP raised from Rs.31 to Rs.50 per kg and a first instalment of Rs.4,500 per tonne of sugarcane.

They are also demanding a ban on ethanol imports and a review of restrictions on the procurement of ethanol made from sugarcane juice, sugar syrup and B-heavy molasses. The charter seeks a direct subsidy of Rs.500 per tonne of cane to compensate farmers for losses linked to drought, ethanol procurement decisions and premature crushing. Farmers have also sought financial relief on sugar factory loans to support the cooperative sugar industry.

Similar protests have taken place in Karnataka, where farmers temporarily suspended their agitation after a committee headed by Professor Ramesh Chand was appointed to examine their demands.

Why Does The Protest Matter For Maharashtra?

The stakes extend beyond sugarcane growers and individual mills. Maharashtra's sugar industry supports a large network of farmers, agricultural workers, cooperatives and rural businesses.

Nearly 50 lakh farmers in the state cultivate sugarcane, while around 10 lakh cane cutters are associated with the industry.

In 2024-25, payments to sugarcane farmers amounted to Rs.28,000 crore, while cane cutters received Rs.10,000 crore. The industry's annual turnover is estimated at Rs.50,000-60,000 crore, making it the state's largest agri-based industry.

The cooperative structure of much of Maharashtra's sugar industry also means that farmers have a direct stake in the financial health of the mills that process their produce.

Chief Minister Devendra Fadnavis met industry stakeholders on March 24 and assured them that he would take up their concerns with Union Cooperation Minister Amit Shah and Prime Minister Modi. Farmers' organisations say there has been little change on the ground since then.

The October 25 rally in Kolhapur has made the issue harder for the state and Central governments to ignore. What began as a dispute over cane prices and sugar MSP has widened into a confrontation over the future of ethanol policy, the financial viability of cooperative mills and the government's approach to supporting agricultural producers.

The farmers' demands now put the focus on whether the Centre will revise its procurement policies and pricing framework, and whether the Maharashtra government can secure relief for an industry that remains central to the state's rural economy.