Government directs sugar mills to not use sugarcane juice for ethanol production to keep prices in check

Food Ministry, in a letter to Managing Directors and CEOs of all sugar mills and distilleries, said that supply of ethanol to oil marketing companies from B-heavy molasses will continue.

December 07, 2023 04:12 pm | Updated 05:15 pm IST - New Delhi

Image used for representation purpose only.

Image used for representation purpose only. | Photo Credit: The Hindu

The Centre on December 7 banned the use of ‘sugacane juice and sugar syrup’ for ethanol production in the 2023-24 supply year that started this month, in order to maintain adequate sugar availability for domestic consumption and to keep prices under check.

However, the government has allowed use of ‘B-molasses’ for ethanol production in 2023-24, a move which sugar industry bodies welcomed.

In a letter issued to all sugar mills and distillers, the Food Ministry directed them “not to use sugarcane juice /sugar syrup” for ethanol production during the 2023-24 ethanol supply year (December-November).

The directive was issued as per clause 4 and 5 of the Sugar (Control) Order 1966.

“Supply of ethanol from existing offers received by Oil Marketing Companies (OMCs) from B-Heavy molasses will continue,” Food ministry said in the letter.

The decision by the ministry comes in the backdrop of estimated fall in sugar production in 2023-24 marketing year (October-September).

Welcoming the move, the National Federation of Cooperative Sugar Factories (NFCSF) Managing Director Pakash P Naiknavare said, “There is huge stock of ethanol made from B-molasses lying in the country apart from contracted quantities. The letter resolves the industry’s concern.” However, there are some ambiguity in the letter that states supply of ethanol from “existing offers” received by OMCs from B-Heavy molasses will continue. “Will it be withdrawn after the existing tender is over? There is no clarity,” he told PTI.

Also, some units have been built for making ethanol from sugarcane juice and sugar syrup alone. These units will become sick if they remain unoperational, he added.

All India Sugar Trade Association (AISTA) Chaiman Praful Vithalani said, “As per the order, B-molasses production shall continue against existing offer but it is not clear if it will continue for next B-molasses tender.” He also said the OMCs may not come with new tender for B-molasses ethanol till sugar situation is clear.

Industry body Indian Sugar Mills Association (ISMA) has projected a 9 per cent fall in gross sugar production at 337 lakh tonnes for the 2023-24 marketing year starting (October-September). It has not estimated the diversion of sugar for ethanol production.

India exported 61 lakh tonnes of sugar during the 2022-23 marketing year, as against a record 112 lakh tonnes in the previous year. The government has not yet allowed exports for this marketing year.

To contain food inflation, the Central government has also banned exports of wheat and broken rice. It has also fixed minimum export price (MEP) for basmati rice.

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