As India Rushes to Grow Corn for Ethanol, Can it Learn from Past Mistakes?

Brazil turned fields into fuel in 1975. America in 2005. Both saw price crashes. Now, from a field in Odisha, I watch India do the same.

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During the winter of 1989, drivers in São Paulo found themselves waiting in long lines for fuel, even though their country had promised fuel would always be available.

It wasn’t petrol, but alcohol. By the late 1980s, over four million cars in Brazil ran on pure ethanol, about a third of all vehicles in the country. For fifteen years, Brazil had reshaped its agriculture to support this shift. The Proálcool program, launched in 1975 after the first oil crisis, exceeded expectations. By 1986, 92 percent of new cars sold ran only on ethanol. Sugarcane farmers had found the ideal customer: one who always needed more.

But then things changed. The price of crude oil dropped from an average of $78 a barrel in 1981 to less than $27 by 1986, making petrol cheap again. At the same time, global sugar prices rose, so mills began sending more cane for sugar production rather than for fuel. Between 1989 and 1990, fuel pumps ran dry. Thousands of cars lined up at stations or sat unused in garages, built for a fuel that was no longer available. Sales of ethanol cars fell sharply, and many Brazilians felt the whole effort had been wasted.

One detail from that story stands out to me. The cane farmer did everything right. He grew what his country needed. His crop was not the problem. The real issue was a series of decisions made far away — in places like a sugar exchange in London, an OPEC meeting, or a finance ministry adjusting subsidies. The risk moved down the chain and ended up with the person who knew the least and had the fewest choices.

For twelve years, I have worked as an agriculture officer in the tribal districts of Odisha, eastern India. Most days, I help farmers handle the risks they face — late rains, early pests, or market prices dropping during harvest. Recently, though, I have been thinking about a risk we cannot see from the field, as India repeats Brazil’s experiment, but much faster.

The American Second Act

Before India’s turn, the story played once more, this time in Iowa.

The United States created its Renewable Fuel Standard in 2005 and expanded it in 2007, requiring oil companies to blend billions of gallons of biofuel into petrol. Corn country responded the way farmers everywhere respond to a guaranteed buyer. In recent years, over 40 percent of the American corn crop has gone into ethanol production. Sit with that fraction for a moment. Nearly half of the corn grown by the world’s largest corn producer is used in engines, and a sliver of what remains is grown for people to actually eat.

Big money was involved. One widely cited study found that corn prices were about 30 percent higher between 2006 and 2014 than they would have been without the mandate. Farm incomes rose. Land values across the Midwest rose with them. So did something harder to see on a balance sheet: dependence. American fuel systems and engines cannot comfortably absorb much more than 10 percent ethanol, a ceiling the industry calls ‘the blend wall’, and ethanol production has been pressed flat against that wall for over a decade. Every few years, Washington renegotiates the mandate, and every few years, the economics of entire rural counties hold their breath. If American petrol consumption declines, and with electric vehicles it eventually will, even an unchanged mandate pushes ethanol past that costly ceiling.

The Iowa farmer’s largest customer is, in the end, a paragraph of federal regulation. He has learned to read policy documents the way his grandfather read clouds.

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Brazil’s growers were stranded by a price. America’s are tethered to a policy. Two of the world’s great farming nations arrived at the same discovery: fuel is a customer unlike any a farmer has ever known.

Act Three: In Fast-forward

In 2018, India set a goal to blend 20 per cent ethanol into petrol by 2030. The country reached this target in December 2025, five years ahead of schedule. Since April, every petrol pump in India has been selling E20. Maize played a key role in making this possible. In the 2024–25 supply year, maize surpassed sugarcane as the main source of India’s ethanol, providing nearly half of the national supply at a government-set price of ₹71.86 per litre.

Brazil needed fifteen years to shift its farms toward fuel production. The United States took about ten years. India made its shift in seven. I saw a small part of this change myself. In the maize-growing area Nabarangpur which is bordering my district, a farmer from Umerkote showed me the field where he used to grow paddy until 2023. The distillery’s agent offered him ₹3200 per quintal, he told me, compared to the local rate of ₹2600. The deal promised guaranteed pickup, payment within 5 days, and no bargaining with traders. He agreed. When I asked what the distillery did with his maize, he told me it went “to the company.” He didn’t know which company or what they did with it. I didn’t press him. It was an honest answer. In all his years selling grain, he had never needed to know what happened to it after the sale. What happened to it afterwards.

But here is what he is now connected to, whether anyone ever explained it or not. His maize price depends on distillery procurement. Distillery procurement depends on the blending mandate. The mandate’s economics depend on petrol demand. And petrol demand depends on crude prices, electric-vehicle adoption, and how many office-goers in Bengaluru choose to take the metro. A man who has never seen an oil refinery now sits downstream of Brent crude and upstream of a scooter’s fuel tank.

For thousands of years, farmers sold their crops to people who ate them. Eaters are the most reliable customers in history. Populations increase slowly, and even during droughts, everyone still needs food. Drivers are a very different kind of customer. They change fuels, buy new vehicles, and move to new cities. Their demand changes with technology and world events — two things I have never seen covered in any farming guide I’ve brought to a village.

What Lessons Have Been Learned?

Allow me to be careful here, because this is the part that gets flattened into slogans. I am not arguing that ethanol blending is bad policy. India imports most of its crude oil, and the energy security case is genuine. The money reaching farmers is genuine too. I have seen, up close, what an assured buyer means to a household that has spent generations negotiating from weakness at the mandi gate. The farmer in my telling made a rational choice. The deal in front of him was too good to turn down.

Photo by Roger Starnes Sr on Unsplash

The question the first two acts raise is narrower, and harder. What happens when petrol demand plateaus? Not if. India’s own policymakers are pushing electric mobility with the same conviction they brought to ethanol, and both bets cannot fully pay off. Whether the crossover arrives in five years or fifteen, a shrinking pool of petrol must one day meet a fixed blending percentage. The arithmetic lands on the distillery, and the distillery’s arithmetic lands on a maize field.

Brazil eventually engineered its way out. Flex-fuel cars, arriving nearly three decades after Proálcool began, let engines run on petrol, ethanol, or any mixture of the two, giving cane growers a market that might bend without breaking. Which raises a question I have not seen asked in the current celebration: what is the flex option for the Indian grower, rather than the Indian engine? The honest answer today is that there isn’t one, other than returning to the mandi he just left.

One more detail, and I have not been able to put it down. In 2024, even as its distilleries bought maize for fuel, India became a net importer of maize, purchasing grain from abroad to replace grain it was burning at home. The poultry farmer and the ethanol plant found themselves bidding for the same cob, and a ship made up the difference.

Somewhere in that maize belt, a farmer I know is deciding how much to plant next season. The agent has quoted his rate, and the rate looks good. It looked good in São Paulo in 1985, and in Des Moines in 2010. Nobody sat across from those farmers to explain who their customer really was.

Niladri is an agriculture officer working in the tribal districts of Odisha, India. He writes about farming, climate, and the people both leave behind.