Source: The post on ethanol blending scheme of government has been created based on the article “Food versus Fuel: What’s happening with Centre’s ethanol blending scheme” published in “Business standard” on 13th December 2023.
UPSC Syllabus Topic: GS Paper 3- Indian economy- Food processing and related industries in India.
News: The Indian government directed mills not to use sugarcane juice/syrup for ethanol production. This is to increase domestic sugar availability.
Why has the government directed not to use sugar cane juice for making ethanol?
Reduced Sugar Stocks: The decision comes in the context of low sugar stocks at the end of the 2022-23 sugar year, which stood at just over 57 lakh tonnes. This is the lowest since 2016-17 and significantly below the record 143.3 lakh tonnes in 2018-19.
Uncertainty Over production: This year’s sugar production is estimated by the National Federation of Cooperative Sugar Factories at 291.50 lakh tonnes. This marks a decrease from 330.9 lakh tonnes in 2022-23 and 359.25 lakh tonnes in 2021-22.
Food Over Fuel Policy: The government is prioritizing sugar for consumption over its use for producing ethanol, a fuel additive.
What is the impact of this decision?
Challenges for Ethanol Producers: Companies set up for producing ethanol from cane juice/syrup, like Balrampur Chini Mills and Shree Renuka Sugars, could face issues due to this change. For example, it could affect the supply of around 135 crore litres of ethanol, previously expected from sugarcane juice/syrup for 2023-24.
Potential Shift to Other Feedstocks: There could be a shift toward using alternative feedstocks such as rice, broken/damaged food grains, and maize, which yield higher ethanol quantities (380-480 liters per tonne), potentially impacting industry dynamics.
Stabilize rising Sugar Prices: This decision is expected to bring about 15 lakh tonnes more sugar into the market. The influx of this additional sugar will not only increase its physical availability but also help stabilize rising sugar prices.
What is ethanol?
Terminology used
EBP programme: The Ethanol Blending Programme (EBP) in India, launched in 2003 by the Ministry of Petroleum & Natural Gas, aims to blend ethanol with petrol. This initiative is designed to reduce pollution, conserve foreign exchange, and provide benefits to farmers by enhancing the value in the sugar industry. The implementation of this programme is being carried out through Oil Marketing Companies (OMCs).
Question for practice:
Examine why the Indian government stopped using sugarcane juice for ethanol and its impact.
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