Indian Food Minister Pralhad Joshi on Thursday said the industry’s demands for revision in ethanol prices and the minimum selling price (MSP) of sugar are under consideration. However, the minister reiterated that the Government needs to first assess the likely production of sugar next season (October-September) before deciding on the demand to permit export.
Speaking to media on the sidelines of an event in New Delhi, he said Niti Aayog has been asked to prepare a roadmap for increasing the ethanol blending with petrol (EBP) programme to 25 per cent as the Government is confident of achieving the 20 per cent blending target by 2025-26.
The Food Ministry fixes the MSP of sugar, which is binding on all sugar mills, to stop unwarranted competition among mills in lowering sugar prices. Before the MSP system was introduced in 2018, there were large defaults by sugar mills in clearing payments to farmers for the sugarcane supplied to them. The cane arrears have been substantially reduced mainly due to additional revenue earned by mills from ethanol and also partly because of MSP protection.
CACP recommendation
Since 2019, the government has not revised the current MSP of ₹31/kg after increasing it i from ₹29/kg fixed in 2018. The Commission for Agricultural Costs and Prices (CACP) has been suggesting the government to revise the sugar MSP every year based on the statutory fair and remunerative price (FRP) of sugarcane, which has been rising every year.
Joshi also said the sugar production situation looks good for the 2024-25 season (October-September) on account of good monsoon. Speaking at the same event, Food Secretary Sanjeev Chopra said due to good monsoon, a good sugarcane crop is expected and thereby production in 2024-25 sugar season looks better (from last year). He said that due to Centre’s intervention and policies, sugar prices are stable and consumers are also relieved.
Chopra on Thursday held discussions with States’ cane commissioners to assess the likely sugar production next year. “Sanjeev Chopra, Secretary, DFPD, chaired a meeting of State’s Cane Commissioners and Directors (Sugar) today to discuss the various issues related to sugar sector and strategies for ensuing Sugar Season 2024-25 that strengthens the sugar sector of the country,” the Department of Food and Public Distribution said in a post on X .
3rd big ethanol maker
Meanwhile, the Food Ministry said in a statement quoting Joshi that India is now the world’s third largest producer and consumer of ethanol due to the policy changes made by the government. Speaking at India Sugar & Bio Energy Conference, he also said: “in last 10 years, from ethanol sale, sugar mills have earned higher revenue, use of ethanol-blended petrol reduced emission of Green House Gases (GHGs), greater investment opportunities emerged, leading to the establishment of new distilleries in rural areas and contributing direct and indirect employment generation as well.”
He said the industry must continue on the path of innovation, public-private partnerships, and farmer-centric policies to ensure that India’s sugar and bio-energy sectors remain globally competitive.
Joshi said the area of sugarcane cultivation has increased by about 18 per cent in the last 10 years, whereas sugarcane production has increased by 40 per cent in the same period. He said considering the huge opportunities in the sector of bioenergy, 2G & 3G ethanol, green hydrogen and bioplastics, the sector should promote technology exchange, joint R&D to encourage investment in biofuels and flex-fuel technology.
‘Finalising ethanol price’
The Petroleum Ministry is at an advanced stage of finalising the ethanol prices for the 2024-25 ethanol supply year (November-October) and it may be sent to the Cabinet for approval in October so that the revised prices are made known before finalisation of contracts by oil marketing companies, sources said.
Currently, ethanol produced from cane juice/syrup is priced at ₹65.61/litre, while rates for ethanol from B-Heavy and C-Heavy molasses stand at ₹60.73/litre and ₹56.28/litre (with incentive), respectively. On the other hand, the purchase price of ethanol produced from maize is ₹71.86/litre (with incentive), from damaged food grains is ₹64/litre and from FCI’s ₹20/kg subsidised rice is ₹58.50/litre. The government has discontinued FCI’s highly subsidised rice for ethanol after facing criticism amid high prices (as food) in domestic market.