As the government is promoting the use of maize for ethanol production to meet its target of achieving 20 per cent blending by 2025-26, there has been an increase in the demand for maize which has led to an increase in its prices. However, the price of ethanol produced from maize has not risen commensurately, resulting in financial constraints for the grain ethanol industry.
With maize being used as a primary source of grain-based ethanol production, there have been efforts taken by the government to promote the production of such grains through the increase in the minimum support prices (MSP) of maize and rice. Highlighting that while the MSP of maize and rice has increased but procurement price of ethanol has not moved in tandem, the Grain Ethanol Manufacturers Association (GEMA) has urged the Centre to increase the maize-based ethanol prices in proportion to the increased MSP of maize.
“Though the government is making directed efforts to increase maize production- by educating the farmer and increasing the MSP price for Maize- these efforts will take time to come on the road. Due to the above, maize prices are increasing, but ethanol prices for the grain ethanol industry have remained stagnant. The maize prices in the last year have increased from Rs 19-20 per kilogram (kg) to Rs. 26-28 per kg in the market, whereas maize-based ethanol price has remained Rs 71.86 per litre,” stated Abhinav Singal, Committee Head and Treasurer of GEMA.
The Maize Cultivation Push
As maize cultivation uses less water than rice and sugarcane and provides a higher yield of ethanol per tonne of feedstock in comparison to sugar, the government has been promoting maize as the primary feedstock for the grain-based ethanol industry. With sugar-based ethanol production having been capped, ethanol production from grain becomes imperative.
However, India’s maize production is insufficient to meet the needs of the ethanol industry in addition to the needs of various other existing industries such as starch, poultry and others. Only a limited quantity of maize is left for the ethanol industry as majority is booked with the other existing industries. As per GEMA, in 2023-24, the dedicated ethanol plants (DEPs) already procured 5.5 MMT of maize to produce 200 crore litre of fuel ethanol in ten months and the balance grain ethanol was produced from damaged food grains from the food corporation of India (FCI).
Until maize availability in India increases to meet its demand from ethanol as well as other industries, the provision of FCI rice stocks would provide temporary relief to the ethanol producers, as well as other industries requiring maize by temporarily relieving the demand and price pressure on maize.
Increasing The Maize Based Ethanol Prices
Citing the growing financial challenges, Singal added, “The industry is requesting the Centre to increase the maize-based ethanol prices by Rs 9 to 11 per litre in proportion to the increase in maize prices in the market/ the increased MSP prices of maize.”
Due to ethanol procurement prices being fixed and input cost being volatile, manufacturers are incurring losses regarding the choice of feedstock. The association has stated that this is dampening the entrepreneurial spirit of the manufacturers, in an industry that is being drive by young entrepreneurs.
