India is facing a potential surge in the cost of essential food items like eggs and chicken, a direct consequence of a national sugar shortage and the escalating demand for ethanol. With sugarcane output declining, ethanol manufacturers are increasingly looking to maize as an alternative feedstock, creating fierce competition for a crop vital to the poultry industry.
The Sugar Supply Crisis
Sugar prices have seen a sharp increase following reduced sugarcane production and the diversion of existing sugar stocks for ethanol production and exports. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) has revised down its sugar output estimates for the 2025-26 season from 35 million tonnes to 31 million tonnes. In 2025-26, over 3 million tonnes of sugarcane were used for ethanol, alongside 0.8 million tonnes exported.
This scarcity has already impacted consumer prices, with sugar rising from approximately ₹49 per kilogram in late July to ₹65 per kilogram by the end of August. As E20 petrol, containing 20% ethanol, becomes the national standard from April 1, 2026, the demand for ethanol remains consistently high, with roughly 25% of India's supply currently derived from sugarcane.
Maize: The Next Ethanol Feedstock?
The unavailability of sugar for ethanol production in the upcoming 2026-27 season is expected to compel ethanol makers to rely more heavily on maize and rice. Chandra Kumar Jain, president of the Grain Ethanol Manufacturers Association, projects a 40-50% increase in maize demand for ethanol next year, assuming stable rice supplies.
However, maize production itself is under pressure. The US Department of Agriculture’s Foreign Agricultural Service anticipates a 10% fall in India’s maize production for 2026-27. Furthermore, the agriculture ministry reported a 3.2% year-on-year decrease in maize planting as of September 4, with industry surveys suggesting acreage could be down by nearly 7%. Deficit rainfall is expected to exacerbate these yield concerns.
Impact on Poultry and Consumers
Maize constitutes a significant portion—around 55% by weight—of poultry feed, serving as a primary energy source for birds. The impending competition between ethanol producers and poultry farmers for maize supplies is therefore a major concern. Wholesale maize prices have already climbed to around ₹27 per kilogram, a more than 30% increase since May-June.
This rise in maize costs has translated directly into higher poultry feed prices, which have jumped from about ₹25 per kilogram in April to over ₹30 per kilogram. The ripple effect is already evident in egg prices; wholesale egg prices in Delhi reached ₹6.70 per egg in July, a nearly 39% increase compared to the previous year.
What Lies Ahead?
In an effort to alleviate pressure on maize, ethanol producers are seeking increased rice allocations from government stocks. However, rice prices are also on an upward trend, having risen 8% year-on-year by September 13. The Indian Council for Research on International Economic Relations (ICRIER) has suggested that India might need to consider a lower ethanol blending rate if critical feedstocks like sugar and maize remain scarce.
The broader issue is the widening disparity between the surging demand for fuel ethanol and the slower growth in agricultural feedstock production. Ethanol demand soared from 1.7 billion litres in 2019-20 to an estimated 12 billion litres in 2025-26, while the output of key crops like maize, rice, and sugarcane has not kept pace. For consumers, this imbalance could mean sustained price pressure on sugar, eggs, chicken, and other food products if maize and other feedstocks continue to be in short supply.