Ethanol Production Shifts from Sugar to Maize

Recently, cereal grains have overtaken sugarcane as the primary feedstock for producing ethanol blending with petrol.

In the current supply year (November 2023-October 2024), sugar mills and distilleries supplied 401 crore litres of ethanol to oil marketing companies by June 30.
Of this total, 211 crore litres (52.7%) were made from maize and damaged food grains, while 190 crore litres came from sugarcane-based feedstocks.
For the first time, grains now contribute over 50% to India’s ethanol production, increasing from 27.1% in 2022-23, 16.7% in 2021-22, 13.6% in 2020-21, 9.2% in 2019-20, 5% in 2018-19, and zero in 2017-18.

Ethanol(C2H5OH), also called alcohol, ethyl alcohol, and grain alcohol, is a clear, colourless liquid ingredient in alcoholic beverages like beer, wine, or brandy.
Ethanol is a natural byproduct of plant fermentation and can be produced through the hydration of ethylene.
Ethanol, which is 99.9% pure alcohol is suitable for blending with petrol.

Initial Production: Till 2017-18, ethanol was produced only from C-heavy molasses, a byproduct that sugar mills could not economically convert into sugar.
Policy Changes: The EBP program received a boost in 2018-19, when the government allowed ethanol production from B-heavy molasses and whole cane juice/syrup, offering higher prices to compensate for reduced sugar production.
Multi-Feedstock Distilleries: Companies installed distilleries capable of using both molasses and grains, switching based on seasonal availability. Maize as the Top Ethanol Feedstock
Government Restrictions: The government stopped supplying FCI rice (July 2023) and restricted cane juice and B-heavy molasses use for ethanol (December 2023).
Incentive Pricing: The ex-distillery price for maize-based ethanol is Rs 71.86 per liter, higher than other feedstocks.

It aims to reduce dependence on crude oil imports, lower carbon emissions, and enhance farmers’ incomes.
It was launched by the Ministry of Petroleum and Natural Gas in 2003.
Blending Target: Initially, the programme set a 5% ethanol blending target, which was later increased to 10% by 2022.
Currently, govt aims for 20% ethanol blending in petrol by 2025.
Current Blending Ratio: The average blending ratio was 13% till June 2024, up from 12.1% in 2022-23 and 10% in 2021-22.

Positive Impact on Farmers: Increased demand for maize benefits farmers in Karnataka, Madhya Pradesh, Maharashtra, and Bihar. It provides a new market for maize, boosting their income.
Concerns from Poultry and Feed Industry: The All-India Poultry Breeders Association and Compound Livestock Feed Manufacturers Association raised concerns about maize shortages.
Government Response: The Centre permitted 0.5 million tonnes of maize imports at 15% concessional duty and is considering further imports to address the demand-supply gap.

The government is discouraging the use of sugar for ethanol production due to its high water consumption.
According to a Mongabay-India report, producing 60-80 tonnes of sugarcane per acre requires an average of nine lakh litres of water twice a month.
The report also notes that to achieve the 20% ethanol blending target by 2025, India would need 1,320 million tonnes of sugarcane, 19 million hectares of additional land, and 348 billion cubic metres of extra water.
Similarly, a NITI Aayog report indicates that producing just one litre of ethanol from sugarcane consumes at least 2,860 litres of water.

The shift to cereal grains as the primary ethanol feedstock highlights the dynamic nature of India’s ethanol production strategy.
While it presents opportunities for farmers, it also poses challenges for other industries reliant on maize.
The government must balance these interests by considering controlled imports, incentivizing alternative feedstocks, and promoting sustainable agricultural practices to support both ethanol production and food security.