Ethanol: An Antidote For Sugarcane Farmers And Industries Falling Profits - ICN INDIA

Ethanol: An Antidote For Sugarcane Farmers And Industries Falling Profits

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By: Hardik Murarka, Associate Editor-ICN

India is the second largest producer of sugarcane after Brazil and more than 50 million people are associated directly or indirectly from sugarcane industry for their livelihood.

But due to glut in sugar market, the mills are not in best of financial position thus there is an inability to pay the mandatory fair and remunerative price (FRP) for sugarcane to the farmers.

The reason for cash strapped mils is excessive production of sugar. It has become a national problem. In 2017-18 and 2018-19, annual sugar production was over 320 lakh tonnes. However, sugar sales were only about 260 lakh tonnes. Further complicating matters is yet another price control: the government’s minimum selling price for sugar stands at Rs 31 per kg, far below production costs of Rs 35 per kg.

In order to help in reviving the dried up income of sugarcane farmers and mills, a new focus has to be made in pushing mills to divert cane into making of Ethanol.

Ethanol is an anhydrous ethyl alcohol and can be produced by fermentation process from high starch content such as sugarcane, corn, wheat etc. India has around 166 distilleries  which has a capacity to distill 2.6 billion liters of Ethanol to be used in Fuel, industrial chemicals etc. currently in India the required consumption for Ethanol blending with gasoline is forecast to rise 22 percent to a record 3.8 billion ltr. Thus the Ethanol consumption growth has outnumbered the production growth in last five years.

India’s new biofuel policy seeks to achieve a national average of 20 percent blending of ethanol with gasoline and 5 percent blending of biodiesel with conventional diesel by 2030. Last year in July GOI has amended the policy which allows Mills to produce ethanol directly from sugarcane juice or B molasses. Also in a R&D done by oil companies it has been showed that there is increase in fuel efficiency at 5% blending with petrol.

To boost the production of ethanol GOI has revised the ex-mill price of ethanol derived from

  • B heavy molasses / partial sugarcane juice to INR 52.43 per liter (from the prevailing price of INR 47.13 per liter).
  • 100 percent sugarcane juice at INR 59.13 per∙ liter (from the prevailing price of INR 47.13 per liter) for those mills who will divert 100 percent sugarcane juice for production of ethanol (no sugar production)

Additionally, GST and transportation charges will also be assessed. The OMCs (oil manufacturing companies) were advised to fix realistic transportation charges so that long distance transportation of ethanol is not discouraged.  OMCs were advised to prioritize ethanol from 1) 100 percent sugarcane juice, 2) B heavy∙ molasses / partial sugarcane juice, 3) C heavy molasses and 4) damaged food grains/other sources, in that order.

Thus With more ethanol production, not only will sugar mills be able to pay the FRP to farmers on time, but India will also save on petrol imports. This will also reduce excess sugar supplies in the market, and boost sugar price, helping mills and provide sustainable benefits to farmers who are frequently affected by bumper sugarcane crops and its lack of market demand.

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