New Delhi: The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has urged the government to increase ethanol prices derived from sugarcane juice and B-Heavy molasses (BHM) to ensure the financial stability of the sugar industry and timely payments to sugarcane farmers, reports The Hindu Businessline.
On January 29, the Cabinet Committee on Economic Affairs (CCEA) approved a 3% increase in the price of ethanol produced from C Heavy Molasses (CHM) for the 2024-25 ethanol supply year (November-October). The new price is set at ₹57.97 per litre, up from ₹56.58. However, prices for ethanol produced from other sources, such as sugarcane juice, BHM, maize, and damaged food grains, remain unchanged.
Currently, oil marketing companies purchase ethanol at ₹71.86 per litre when made from maize, ₹65.61 from sugarcane juice or syrup, ₹64 from damaged food grains like rice, and ₹60.73 from BHM. Ethanol produced from subsidized rice provided by the Food Corporation of India (FCI) continues to be priced at ₹58.50 per litre.
CHM, a byproduct of sugar processing, contains minimal sugar, allowing maximum sugar production when ethanol is made from it. In the previous sugar season (October-September), the government permitted ethanol production only from CHM.
ISMA emphasized that the sugar sector has invested approximately ₹40,000 crore to double its ethanol production capacity over the past five years, reaching around 850 crore litres annually. The industry is prepared to further expand its capacity to meet the government’s ethanol blending targets.
The association highlighted that ethanol prices from sugarcane juice and BHM were last revised in the 2022-23 supply year. Meanwhile, the fair and remunerative price (FRP) for sugarcane has increased twice, totalling ₹35 per quintal, reaching ₹340 per quintal for the 2024-25 season.
“The 11.5% increase in FRP should be reflected in ethanol procurement prices,” ISMA stated. The association also noted that rising production costs have made it essential to revise ethanol prices to maintain industry viability, ensure financial stability, and guarantee timely payments to farmers.
ISMA proposed a formula-based approach to determine ethanol prices, linking them to the FRP of sugarcane. “A formula tied to FRP, considering input cost increases, should be used to set ethanol prices. This will ensure industry viability and support farmer welfare,” the association said.
The sugar industry’s ability to sustain its investments and contribute to the government’s roadmap for achieving ethanol blending targets beyond 20% (E20) will depend heavily on government support, ISMA added.
The association’s appeal comes amid calls from experts to reform the Public Distribution System (PDS) by including millets to enhance nutritional security and reduce costs.
