The displacements are happening in the country's Omo Valley, according to a report by the New York-based Human Rights Watch (HRW).
The valley, a World Heritage site, is also the site of a controversial dam.
The Ethiopian government has said that the plantations will bring employment to people from the local area.
But HRW says that in order to make space for them, government security forces are compelling communities to relocate from their traditional lands, using violence and intimidation.
In its report, HRW says that at the time of its visit to the area - in June 2011 - "military units regularly visited villages to intimidate residents and suppress dissent related to the sugar plantation development". It added that "soldiers regularly stole or killed cattle".
The sugar plantations will be irrigated in part by the Gibe III hydropower project, the group says.
The dam, which would become Africa's largest and the fourth-biggest in the world, has provoked much controversy.
The Ethiopian government says that the project must be completed in order to bring energy and development to the country.
But campaigners fear it will fuel conflict over already scarce water resources, and rob communities of their livelihoods.