President Museveni advised the buyers and out-growers to sit together and agree on the prices taking into consideration the market prices globally.
The President made the remarks as he commissioned a state of the art ethanol distillery at Kakira Sugar Limited in Jinja district.
The US$36 million facility, which is the largest in the East African Region, will be producing 20 million litres of ethanol annually.
Ethanol is distilled from the fermentation of materials containing carbohydrates or sugar.
He assured them of the bill to be tabled in Parliament to allow the blending of ethanol with petrol.
Ethanol can then be processed to produce fuel and extra-neutral alcohol and its ingredients include sugarcane molasses, grain, sorghum, maize and sugar beet among others.
Ethanol can then be processed to produce fuel and extra-neutral alcohol.