Why Farmers in Gujarat Are Moving Away From Sugarcane and Choosing Other Crops
For decades, sugarcane has been an important cash crop in parts of south Gujarat. But a gradual shift is now becoming visible: some farmers are reducing their sugarcane acreage and moving towards alternatives such as horticulture and other crops.
The reasons are not limited to one bad season. Rising cultivation costs, pressure on farm profitability, labour shortages, payment concerns, climate-related uncertainty and changing land-use patterns are all influencing farmers' decisions.
The Gujarat farmers shifting from sugarcane to other crops story also highlights a wider challenge for India's sugar industry. Sugarcane is not simply an agricultural crop; it supports sugar mills, transporters, ethanol production and thousands of rural jobs. If cane cultivation becomes less attractive in important producing regions, the impact can eventually extend beyond farms.
Rising Costs Are Squeezing Sugarcane Farmers
One of the biggest concerns for farmers is the gap between the cost of cultivation and the income they receive from sugarcane.
Sugarcane is a long-duration crop and requires significant spending on inputs, irrigation, labour and harvesting. Farmers interviewed by BBC Gujarati cited rising costs of fertilisers, labour and other agricultural inputs as major reasons for considering alternative crops. A 2023 study covering sugarcane farmers in south Gujarat also identified low prices, rising labour costs and transportation expenses among the major challenges faced by growers.
The problem for a farmer is not simply the headline price of sugarcane. The real calculation is:
Income from cane − cultivation cost − labour − transport − time spent waiting for payment = actual farm profitability.
When this equation becomes less attractive, farmers naturally compare sugarcane with crops that may offer better returns, lower costs or greater flexibility.
Sugarcane Prices Have Increased, but Profitability Remains the Key Issue
The central government has approved a Fair and Remunerative Price, or FRP, of ₹365 per quintal for the 2026–27 sugar season, based on a basic recovery rate of 10.25%. FRP is the minimum price that sugar mills are required to pay sugarcane farmers, subject to the applicable recovery-linked system.
However, a government-announced minimum price does not automatically solve every farmer's profitability problem.
Farm-level returns can vary because of differences in yield, recovery rate, irrigation costs, labour expenses, distance from mills and local conditions. Some Gujarat farmers have argued that the increase in input costs has outpaced the improvement in their economic returns from cane cultivation.
This is why the debate is increasingly shifting from “What is the price?” to “What is the farmer's final profit?”
Delayed Payments and Problems in the Sugar Mill Ecosystem
The financial health of sugar mills is closely connected to the income of sugarcane farmers.
When sugar mills face pressure from excess sugar stocks, regulated sales or weak cash flows, farmer payments can become a concern. At the national level, the government said that about 97% of sugarcane dues for the 2025–26 sugar season had been paid by August 20, 2026.
But the experience of farmers can differ across regions and individual mills.
In Gujarat, the closure or financial stress of some cooperative sugar mills has added another layer of uncertainty. Farmers and industry representatives interviewed by BBC Gujarati pointed to delayed payments and financial problems at certain mills as factors that have affected confidence in sugarcane cultivation.
For a farmer, delayed payment can be particularly difficult because the next crop cycle requires fresh spending on seeds, fertiliser, labour and other inputs.
Labour Shortages Are Making a Labour-Intensive Crop More Expensive
Sugarcane cultivation requires considerable labour, especially during harvesting.
As rural labour costs rise and workers find opportunities in construction, industry and urban areas, farmers may face both higher wages and difficulty finding workers at the required time.
The south Gujarat research cited in the BBC Gujarati report identified rising labour costs as one of the significant challenges for sugarcane growers. Limited access to mechanised harvesting can further increase dependence on manual labour.
This matters because sugarcane is not a crop that can always be managed with minimal human intervention. A shortage of workers at harvest time can affect both costs and crop management.
Climate and Water Risks Are Adding Uncertainty
Agriculture is becoming increasingly vulnerable to irregular weather patterns, and sugarcane is no exception.
Parts of Gujarat have faced uneven monsoon conditions, while changing rainfall patterns can affect soil moisture and crop health. Recent reporting has highlighted delayed and uneven rainfall across parts of the state, adding to the uncertainty facing farmers.
A long-duration crop such as sugarcane requires farmers to make decisions well in advance. If rainfall becomes less predictable, irrigation requirements and production risks can increase.
Farmers may therefore prefer crops that have shorter cycles or allow them to respond more quickly to changing weather and market conditions.
Some Farmers Are Exploring Horticulture and Other Alternatives
The shift away from sugarcane does not mean that every farmer is abandoning the crop.
Instead, some growers are diversifying. BBC Gujarati reported examples of farmers moving part of their land towards alternatives, including mango cultivation, while other farmers are considering different crops based on local conditions and expected returns.
Diversification can reduce dependence on a single crop and potentially spread risk. However, alternative crops also come with their own challenges, including price volatility, disease, storage requirements and market access.
Switching crops is therefore not automatically a guarantee of higher income. The success of diversification depends heavily on soil conditions, water availability, investment capacity and access to buyers.
Industrialisation Is Also Changing Gujarat's Agricultural Landscape
The story is not only about crop economics.
Gujarat's rapid urbanisation and industrial development are changing how land is used. Recent reporting based on government data showed a decline in the state's agricultural land over the past five years, with urbanisation, industrialisation and lower farm income among the factors being discussed.
In some areas, farmers may reduce agricultural activity altogether or sell land for non-agricultural purposes. This can affect the long-term availability of land for crops such as sugarcane.
For sugar mills, a sustained reduction in nearby cane cultivation can create a supply challenge. Mills depend on sufficient sugarcane availability because transporting cane over long distances can increase costs and create logistical difficulties.
Why This Matters for India's Sugar and Ethanol Industry
India remains one of the world's largest sugarcane-producing countries. Government data estimates sugarcane production at 500 million metric tonnes in 2025–26, while the area under sugarcane cultivation was reported at 58.87 lakh hectares.
The sugarcane economy also extends beyond sugar. Mills increasingly use cane and related feedstocks for ethanol, electricity generation and other products.
A reduction in sugarcane availability in a particular region does not necessarily mean a national shortage. Production patterns can shift between states and regions. However, if farmers move away from cane on a sustained basis, mills may face higher procurement pressure and regional supply constraints.
For the industry, maintaining a viable relationship between cane prices, sugar prices, ethanol opportunities and mill profitability will remain important.
What Farmers, Policymakers and the Industry Will Watch Next
The next few seasons could depend on several factors:
Whether sugarcane cultivation costs continue to rise
How effectively the FRP translates into farm profitability
Timeliness of payments from sugar mills
Monsoon performance and water availability
Access to labour and mechanised harvesting
The economics of alternative crops
The financial health of cooperative and private sugar mills
Growth in ethanol and other value-added revenue streams
The government has highlighted ethanol diversion as one way to improve the financial position of sugar mills during periods of surplus sugar production.
But at the farm level, the most important factor will remain straightforward: whether growing sugarcane provides a competitive and sustainable return compared with other available options.
The Bottom Line
The shift by some Gujarat farmers away from sugarcane appears to be driven by a combination of rising costs, pressure on profitability, labour challenges, payment concerns, climate uncertainty and changing land economics.
The government's higher FRP for the 2026–27 sugar season provides an important benchmark, but farmers will ultimately judge sugarcane by the money left after production costs and the reliability of payments.
For Gujarat's sugar industry, the trend is worth watching. A sustained decline in cane acreage could affect sugar mills and related businesses, while successful diversification could reshape the agricultural economy of parts of the state.
The key question now is whether improvements in pricing, mill finances, mechanisation and alternative revenue sources such as ethanol can make sugarcane cultivation competitive again.
Follow our blog for more updates on Indian agriculture, business, markets, the economy and major developments affecting farmers and investors.