Government’s Measures to Boost Domestic Sugar Availability

Recent Directives and Policy Changes

• The government has recently taken decisive measures to bolster domestic sugar availability. Notably, there’s been a ban on sugar exports and limitations imposed on diverting sugar for ethanol production. The Ministry of Consumer Affairs, Food, and Public Distribution, on December 7, instructed mills and distilleries to refrain from utilizing sugarcane juice/syrup for ethanol manufacturing.

Ethanol Blended Petrol (EBP) Programme: A Government Triumph

• The Ethanol Blended Petrol (EBP) Programme stands as a significant accomplishment for the government. This initiative has witnessed a remarkable surge in ethanol blending with petrol, soaring from a mere 1.6% in 2013-14 to a noteworthy 11.8% by 2022-23.

Diversification of Feedstocks and Ethanol Production

• The success of the EBP programme owes itself to the strategic diversification of feedstocks. This includes a range of sources such as C-heavy molasses, B-heavy molasses, sugarcane juice/syrup, and grains.

Varied Ethanol Production from Different Feedstocks

• Different feedstocks yield varying quantities of ethanol:
• C-heavy Molasses: Historically utilized for ethanol production, yielding 220-225 litres of ethanol per tonne.
• B-heavy Molasses: Offers a higher ethanol yield of 290-320 litres per tonne compared to C-heavy molasses.
• Direct Fermentation of Sugarcane: Direct fermentation of entire sugarcane without sugar extraction produces 80-81 litres of ethanol per tonne.

Government’s Ethanol Blending Scheme and Contention on Food vs. Fuel

• Post-2017, there has been a surge in ethanol production, owing to the utilization of B-heavy molasses, sugarcane juice/syrup, and novel substrates like surplus rice, broken grains, and maize. The government incentivized ethanol production from non-C-heavy molasses feedstocks by offering higher prices.

Impact and Challenges for the Industry

• However, the recent directive of December 7 poses challenges, especially for companies equipped for ethanol production from cane juice/syrup. The Oil Marketing Companies’ (OMCs) tender for 825 crore litres of ethanol for 2023-24 might face implications, particularly concerning the 135 crore litres sourced from sugarcane juice/syrup.

Unsettled Terrain: Uncertainty in Pricing and Sugar Supply Concerns

• The government’s delay in announcing prices for various ethanol feedstocks for 2023-24 despite the alignment of the ethanol supply year with the sugar year contributes to industry uncertainty. Additionally, concerns loom over low sugar stocks from the 2022-23 year-end and ambiguous production forecasts for 2023-24, as projected by the National Federation of Cooperative Sugar Factories.

Government’s Priority and Conclusive Thoughts

• The recent decisions by the Centre underscore a shift in focus towards prioritizing domestic sugar availability over ethanol production. These decisions significantly impact both the sugar and ethanol industries, showcasing the intricate balance between fostering food security and renewable energy initiatives.