By BINOD ANAND
There is a particular cruelty in the way India argues about sugar. Every few months, when the price rises and a household feels it in the cost of a festival sweet, we reach for the easiest villain we can find. This year the villain is ethanol — the story that the cane which should have sweetened our tea has been burned in our fuel tanks instead. It is an emotionally satisfying accusation because it sets food against fuel, the plate against the pump, and lets everyone feel that a moral line has been crossed. But behind every kilogram of sugar stands a farmer who rose before dawn to cut cane in the heat, a mill that borrowed working capital to crush it, a cooperative that waited months to be paid, and a family that simply wants to buy sweets for Diwali without wincing at the till. To tell all of them that the fault lies with the farmer’s own crop, or with a clean-energy programme that is putting money back into that farmer’s pocket, is not merely inaccurate. It is a betrayal of the very people who feed and fuel this country.
And it is a betrayal with authors, because this story did not write itself. When a nation is made to doubt its own success so precisely — at exactly the moment that success begins to threaten powerful interests — we are entitled to ask who is holding the pen. Two hands are on it. The first belongs to the commodity-trading lobby: the merchants and financiers who move the world’s sugar and who have every reason to keep India a taker of prices rather than a maker of them. Their influence does not halt at our borders; it reaches into the very institutions we built to protect ourselves from it.
We created the NCDEX, our own commodity exchange, so that the Indian farmer might at last discover a fair and independent price for his own produce. Yet too often our exchanges do not free the farmer from the global benchmark — they merely relay it, and in relaying it they serve the traders who profit from its swings far more faithfully than the grower who is bound to its verdict. An instrument built for the farmer that ends up speaking for the trader is not a small failure. It is the quiet surrender of India’s price sovereignty to forces sitting far outside India, and the farmer pays for that surrender in every rupee he never receives.
The second hand is heavier still, and it belongs to the fossil-fuel lobby, which watches India’s ethanol revolution with something close to fear. For a country that imports eighty-five per cent of its oil to begin growing a fifth of its own fuel in its own fields is not a technical adjustment; it is the loosening of a dependence that has enriched others for generations. Those who sold us that dependence do not want E20 to succeed — and they have learned that the cheapest way to stop a revolution is not to fight it in the open but to make a nation distrust its own hand. This is not accident, and it is not paranoia. It has a name. The economist Robert Shiller called it narrative economics: the deliberate spread of contagious stories that move markets and bend policy, not because they are true but because they are sticky enough to lodge in a frightened public mind. “Ethanol is emptying your sugar bowl.” “E20 is ruining your engine.” These are not observations; they are engineered narratives, designed to make India flinch from the very independence it has fought so hard to win. And a great nation that flinches at the wrong moment can be talked out of its own future.
The farmer deserves a better debate than this. The consumer deserves a better explanation. And India — the world’s largest consumer and second-largest producer of sugar — deserves a commodity policy worthy of its size, and the courage to see through the stories told about it. Because the truth is that the price of Indian sugar is no longer decided in the cane field or the ethanol plant at all. It is formed in places most Indians never see: in the inventories that traders choose to hold or release, in the procurement calendars of vast industrial buyers, and on futures screens and at refining hubs thousands of kilometres away. India grows the cane and consumes the sugar, yet on the one thing that matters most to the household — the price — it behaves like a bystander in its own market. That paradox is the real story. And unless we confront it, every price rise will end the same way: with the wrong person blamed, the real machinery untouched, and the storytellers left holding the pen.
Consider first how completely the ethanol accusation falls apart against the government’s own figures. The share of sugar diverted to ethanol has actually declined — from around twelve per cent in 2022-23 to roughly nine per cent in 2025-26 — even as prices have climbed. Nearly three-fourths of India’s ethanol now comes not from cane at all but from grain, chiefly maize. Diversion is falling while prices are rising; the two lines move in opposite directions, which is the opposite of what the accusation requires. What actually happened this year is that retail sugar rose from ₹48.18 a kilogram on 20 July 2026 to ₹55.70 by 20 August, with prices in several markets pushing past ₹60 to ₹70 as the festival season approached — a jump of roughly forty per cent in two months, sharp enough to force India to import sugar for the first time in nearly a decade. Even the government attributes this to lower output from red rot disease and El Niño weather, to festival demand, to tightening world supply and to hoarding. Ethanol appears nowhere on that list, and honesty demands we take it off ours too.
There is, moreover, a bitter irony in blaming ethanol, because ethanol has been one of the few forces putting money reliably into the farmer’s hand. By giving mills a second, guaranteed market for cane and its by-products, the blending programme has strengthened their liquidity and helped clear cane dues faster than in most years, with the great bulk of the 2025-26 arrears reported paid even as retail prices climbed. To accuse this programme of harming the very farmer it is paying is not merely factually wrong; it is to take a household’s genuine anxiety at the sugar counter and turn it against the one policy that has been quietly repairing the rural balance sheet. The consumer’s pain is real. But it has been pointed, with some care, at exactly the wrong target — and by people who gain when the aim is wrong.
Once the decoy is set aside, two forces remain — one domestic, one international — and neither has anything to do with fuel. The first lives inside our own wholesale markets, in the behaviour of traders, wholesalers and the enormous class of bulk industrial buyers who together consume some sixty to sixty-five per cent of India’s sugar. These are not households that can use one spoon less in their tea. They are beverage makers, biscuit and confectionery manufacturers, dairies and the vast sweets economy, and their demand is inelastic and forward-looking. When they expect prices to climb, they procure ahead and hold; when traders sense the same, they accumulate inventory and time its release. A tonne of sugar sitting in a warehouse in anticipation of a higher price is physically identical to a tonne offered for sale today, but its effect on the market is the opposite. This is why spot and wholesale prices can rise even when the sugar has not disappeared — and it is why the government, when it acted, reached not for more production but for stock limits on dealers and a fifteen-day inventory cap on bulk users. That choice was itself a confession: the pressure was coming from inventory behaviour, not from an empty shelf.
The second force reaches India from outside, and it is the more sophisticated of the two. Sugar does not travel from farmer to consumer in a straight line; it passes through merchants, shippers, financiers, refiners and warehouses, and the price expectations of that entire chain are anchored to a benchmark set offshore — ICE Sugar No. 11, the world’s reference contract for raw sugar. That signal enters India through import parity: the true replacement cost of sugar, which bundles the world price with freight, insurance, financing, port charges, taxes and the movement of the rupee against the dollar. When import parity rises, domestic expectations rise with it, long before any ship has docked. And the transmission runs in both directions, as India’s own policy has just demonstrated. On 20 August 2026, the moment the Directorate General of Foreign Trade opened a duty-free quota for one million tonnes of raw sugar — waiving a standing hundred per cent duty — benchmark white-sugar futures in London and raw-sugar futures in New York jumped by as much as four per cent within hours. A single Indian notification repriced the global market. This is not a market India merely participates in; it is one India is wired into, and one that responds to India while India remains strangely unable to respond to it.
The reason for that helplessness is structural, and it is worth naming plainly. Global sugar trading is concentrated: historical studies found a handful of major merchants — names such as Bunge, Cargill, Czarnikow, ED&F Man, Louis Dreyfus and Sucden — once handling roughly two-thirds of the international trade. That figure is old and proves no present-day cartel, but it establishes a durable truth about the terrain: information, inventory and financing power sit with a small number of very large players, and around them has grown a formidable lobby spanning refineries and the wider value chain whose interests are served precisely by the status quo — by an India dependent on external benchmarks, its price discovered elsewhere, its farmers and mills carrying risks they have no means to hedge. Add to this the geography of modern trade, the great refining-and-logistics hubs such as Dubai’s Jebel Ali, where sugar can be imported, stored, refined, financed and re-exported as regional signals dictate, and the picture is complete. The sophisticated participant can hold physical stock, finance it, hedge it on ICE and time its release, all at once. The Indian farmer carries production risk, the mill carries inventory risk, the cooperative carries the burden of working capital, and the household carries the retail price — while those best equipped to manage risk quietly manage all of it together. India supplies the volume; the value of managing its price is captured somewhere else.
There is a further layer to this that India has been too polite to discuss, and it is time we did. Why does the “ethanol stole your sugar” story appear so reliably, and travel so fast, when the government’s own data refute it? Look at what India has actually accomplished. It reached twenty per cent ethanol blending in 2025 — five years ahead of its original target — lifting blending nearly thirteen-fold from 1.5 per cent in 2014. In doing so it has saved well over ₹1.4 lakh crore in foreign exchange by replacing imported crude with domestic biofuel, cut carbon emissions by the order of seven to eight hundred lakh tonnes, and set out on a road the oil ministry believes could shave nearly four billion dollars off the annual crude-import bill. For a nation that imports about eighty-five per cent of its oil, this is not a minor efficiency; it is a structural stride toward energy sovereignty, and a declaration that India intends to be a net-zero and biofuels trend-setter rather than a permanent customer at someone else’s pump. A country of this size turning its farmers from Annadata to Urjadata — food-givers into energy-givers — is a disruption to everyone who profited from India’s dependence. When such a country is suddenly convinced that its own clean-energy success is emptying its sugar bowl, the beneficiary is not the Indian consumer; it is whoever would prefer India importing, dependent and price-taking rather than sovereign, blending and price-making. This need not be a conspiracy, and I make no such charge — narratives do not require coordination to serve interests. The point is only that a domestic price blip the data cannot even trace to ethanol is being used to cast doubt on a programme that is delivering security, income and cleaner air. We saw the same pattern in the organised campaign claiming E20 was ruining engines, a wave of alleged damage that the manufacturers’ own service records never showed. The correct answer to a manufactured doubt is never retreat. It is evidence — and it is institutions.
And here we arrive at the heart of the matter, because naming the forces is not the same as defeating them. Against a chain this concentrated, this well-financed and this well-lobbied — traders who can bend the spot market by holding stock, refiners who move the wholesale market through import parity — the scattered farmer and the under-capitalised mill cannot prevail alone. Stock limits, export bans and emergency imports are firefighting; they arrive after the price has already moved and they leave the machinery intact. Concrete, lasting action is possible only through a Cooperative Economic Framework dedicated to the whole sugarcane value chain, from production to consumption, at every level. The logic is simple: where a private value chain concentrates information and margin at the top, a cooperative one distributes both to the base. A cooperative that stores cane and sugar in transparent warehouses, issuing electronic receipts against which farmers can borrow, is the direct antidote to speculative hoarding — because when a farmer-owned custodian can hold stock in daylight and release it predictably, the trader’s power to manufacture scarcity simply dissolves. A cooperative with professional finance and a hedging desk lets mills and producer bodies manage price risk the way the great merchants already do; the farmer need not become a futures trader, but the institution that represents him must. And a cooperative that treats cane not as sugar alone but as a platform — sugar, ethanol, molasses, bagasse power, compressed bio-gas, biofertiliser — captures the whole worth of the crop for the people who grew it, instead of surrendering a margin at every handoff. This is not charity dressed as policy. It is market design, and it is the one design that answers both the domestic inventory game and the international parity trap at the same time.
It is here that India’s own cooperative giants must rise to the moment, because the institutions to build this already exist — they have only to act together. Imagine a single dedicated Multi-State Cooperative for the entire sugarcane value chain, sponsored and seeded by the three great pillars of Indian cooperation: IFFCO, which has shown how a farmer-owned enterprise can stand shoulder to shoulder with the largest corporations in the world; the National Federation of Cooperative Sugar Factories, which already speaks for the cooperative mills that crush this nation’s cane; and Amul, whose very name is proof that when producers own the chain from the village to the retail shelf, the farmer prospers and the consumer is protected at the same time. Picture this cooperative built on the Amul principle applied to sugar — every cane grower and every miller a shareholder, not a supplier to be squeezed but an owner to be enriched — aggregating production, financing and storing it transparently, processing the full value of the crop, hedging its price collectively, and reaching the market and the household directly. Such an institution would give India, for the first time, a farmer-owned counterweight strong enough to sit at the table where sugar’s price is discovered, rather than waiting outside to learn the verdict. It would turn the world’s largest sugar consumer from a bystander into a price-maker, and it would ensure that the rewards of an agricultural miracle flow downward to the fields that created it rather than upward to the layers that merely traded it.
This is the vision Bharatonomics has always argued for: an economy that heals itself through cooperation, in which the men and women who grow our food and fuel our future are owners of the value they create and not victims of its volatility. India has the cane, the farmers, the mills, the cooperatives, the exchanges and the capital. What it has lacked is the will to connect them into a single farmer-owned architecture that spans the chain from field to consumer.
Let IFFCO, NFCSF and Amul build it. Let every producer and every miller hold a share in it. And let us never again explain a price we did not understand by blaming the farmer who fed us and the fuel that is setting us free. Ethanol is a footnote. A cooperative that owns the cane, from the first furrow to the last spoonful, is the answer — and the future.
Author is Secretary general of CNRI and Editor of Voice of Rural India
