Monsoon Bounty: Will It Cool Food Prices & Boost Ethanol Makers

India's annual monsoon is more than just a weather event — it is the lifeblood of the country’s agrarian economy. As the southwest monsoon gains strength in 2025, signs point toward a potentially abundant season, bringing with it hopes of improved agricultural yields, easing food inflation, and a boost for ethanol production.

Relief for Food Prices

In recent years, erratic rainfall and unseasonal weather patterns have led to crop damage and fluctuating food prices. This year, however, early forecasts suggest a favourable monsoon across key agricultural states such as Maharashtra, Uttar Pradesh, Punjab, and Madhya Pradesh. Adequate rainfall during the sowing season is expected to benefit crops like rice, pulses, sugarcane, and oilseeds — staples that influence overall food inflation in the country.

For consumers, this comes as welcome news. Retail inflation in food items such as onions, tomatoes, and pulses had remained high for several quarters due to supply disruptions and low yields. A healthy monsoon could stabilize supplies, reduce wholesale prices, and eventually bring down retail costs, offering some relief to the average household budget.

Boost for Ethanol Production

Another sector eagerly awaiting the monsoon’s bounty is India’s fast-growing ethanol industry. Sugarcane, a water-intensive crop, thrives during good monsoon years. With ample rainfall, sugarcane yields are likely to increase, leading to a surplus in sugar production. This opens the door for higher ethanol output, as more sugarcane can be diverted toward ethanol blending rather than producing excess sugar.

India’s ethanol blending program — aimed at reducing oil imports and promoting greener fuel alternatives — has gained momentum in recent years. The government has set an ambitious target of achieving 20% ethanol blending with petrol by 2026. A strong monsoon and higher sugarcane availability could help accelerate this transition, ensuring steady ethanol supply for oil marketing companies.