The draft order was released for stakeholder consultation till 20 May 2026, aiming to modernise the regulatory framework for the sugar sector. Instead, it has opened faultlines. 

Farmers are pointing to structural issues related to pricing, arrears, and market control. They also say it will help mills profit from ethanol while tying their own incomes to sugar alone.

P. Krishna Prasad, finance secretary of the All India Kisan Sabha (AIKS), a farmers’ union with over 1.5 crore members, told The Secretariat, “This is an anti-farmer order which does not take into account the inflation index and many important costs a farmer incurs during the production of sugarcane.”

According to the Cabinet Committee on Economic Affairs (CCEA), there are 5 crore sugarcane farmers and their dependents in India.

Fair Remunerative Price

The draft order retains the core architecture of the Fair and Remunerative Price (FRP) system. FRP is the minimum price that sugar mills must legally pay to sugarcane farmers.

FRP is determined by the CCEA after considering production costs, including paid-out costs and unpaid family labour (A2+FL), sugar recovery rates, and a reasonable profit margin for farmers.

While the draft order continues the FRP mechanism, farmer unions see it as increasingly misaligned with ground realities.

“CCEA has enhanced only ₹10 as the FRP, which now stands at ₹365. But we demand that it should be around ₹500 per quintal,” Prasad said.  

The Ethanol Factor

Then there is the question of revenue sharing from ethanol. 

India is looking at ethanol as an alternate fuel, especially with the West Asia conflict posing energy security risks over crude oil imports. Of the 1,953 crore litres of existing capacity of ethanol production, 49.82% is based on sugarcane, as per official data pertaining to October 2025.

Farmers say under the new draft order, sugarcane cultivators will continue to be paid on the basis of a formula linked to sugar alone - and leave them out as far as earnings from ethanol are concerned. 

So, they argue, it will give them a raw deal while helping mills capture value from ethanol.

India's ethanol policy treats sugarcane as an energy crop, but the sugarcane pricing policy still sees it only as a sugar crop.

Industry stakeholders, however, point out that ethanol is a value-added product, involving separate investments, processing infrastructure, and risk. Including it in the cane pricing formula, they say, would blur the line between agricultural output and downstream industrial activity.

“A revenue-sharing approach would link farmer incomes to fluctuating sugar and ethanol markets, introducing uncertainty and risk — particularly given the policy-driven nature of ethanol pricing and allocation,” Deepak Ballani, Director General, Indian Sugar & Bio-energy Manufacturers Association (ISMA), told The Secretariat.

Payment Delays

Payment delays to farmers also remain a structural issue, with arrears persisting across major cane-producing states despite regulatory provisions mandating payments within 14 days.

According to All India Kisan Sabha, sugarcane arrears have surged in the 2025–26 season, with unpaid dues to farmers reaching ₹16,087 crore.

“Out of these, ₹4,956 crore is from Karnataka, ₹4,252 crore from Maharashtra, and ₹3,287 crore from Uttar Pradesh,” Prasad said.

Moreover, according to the draft, the Ministry of Consumer Affairs, Food & Public Distribution has also proposed to increase the recovery rate from 9% to 10.25%, which means FRP will be deducted if they supply below a 10.25 percent. This, they say, will cause significant financial losses to farmers.

Avik Saha, National President, Jai Kisan Andolan, also alleged, “Farmers have been deliberately kept out of the (consultation) exercise, although they are going to be most affected by the order and are the most important stakeholders in this exercise.”

Samyukt Kisan Morcha (SKM), an umbrella body of 400 farmer unions, has also sent an email to the Under Secretary to the Government of India - who issued the Office Memorandum dated 20 April, 2026 under which the draft order was circulated - demanding that the draft order be supplied to the Morcha and its comments and suggestions be taken on record.

Control And Competition

The draft order has also triggered concerns around market structure. A proposal to increase the minimum distance between sugar mills from 15 km to 25 km is being interpreted by farmer groups as a move that could reduce competition for cane procurement.

In regions where mill density is already uneven, this could increase farmer dependence on a single buyer, reinforcing localised monopolies.

“This is against the interest of farmers as the fewer the mills, the lesser the avenues for sale of sugarcane by farmers and competition between the mills; the dependence of farmers on the mills will increase, and the arbitrariness of the mills will affect the interests of farmers. Imposing restrictions on the capacity expansion of mills is a direct threat to the future of farmers,” Saha said.

Echoing him, Prasad said that it would lead to monopolistic control by factories. “You have to cover a 25-km distance if you want to find another market or to sell to another factory. This will constrain farmers, making a monopoly for that particular factory,” he said.  

Protest Brewing

Many farmers' unions are mulling further action.

AIKS has urged the government to withdraw the draft before the public consultation deadline, failing which it has warned of a nationwide agitation, including a proposed “chakka jam” across sugar-producing regions.

“The Sugar Farmers Federation of India, an affiliated body of the AIKS, is meeting on 13 May 2026 in New Delhi and after discussing, they will submit their inputs as critical points to this order. We will be holding protests, no doubt about that,” Prasad said.

Jai Kisan Andolan is also going to organise a meeting in Meerut on the matter to raise their demands on 8 May 2026.

Meanwhile, the Karnataka State Sugarcane Growers’ Association has urged the state government to constitute a committee to prepare a report to be submitted to the Centre ahead of the proposed amendments to the Sugar Control Act 1966.

Addressing a press conference in Mysuru on 28 April 2026, association president Kurubur Shanthakumar said the constitution of such a committee was needed in view of the Centre seeking opinions.

Sugar Production in India

According to ISMA, as of 30 April 2026, sugar production in the country reached 275.28 lakh tons, around 7% higher compared to 256.49 lakh tons on the corresponding date last year.

Uttar Pradesh has produced 89.65 lakh tons against last year's production of 92.40 lakh tons. Maharashtra and Karnataka have produced 99.2 lakh tons and 48.01 lakh tons, respectively, compared to 80.93 lakh tons and 40.40 lakh tons during the same period last year.