In a significant development benefiting producers of sugarcane-based ethanol, oil-marketing companies (OMCs) have declared a notable increase of Rs 6.87 per litre in the procurement price of ethanol derived from C-heavy molasses for the 2023-24 season. This marks the highest spike in procurement rates in over five years and has been in effect since the commencement of the season in November.
Following this adjustment, the procurement price for ethanol produced from C-heavy molasses stands at Rs 56.28 per litre, a notable rise from the Rs 49.41 per litre recorded in the previous procurement season (2022-23).
This increase comes on the heels of a directive from the central government to halt the production of ethanol from sugarcane juice or syrup for the 2023-24 season, citing concerns over India’s sugar production. The sugar marketing season runs from October to September.
During the 2022-23 ethanol supply year (December-October), approximately 25% of the 4.94 billion litres of ethanol supplied to OMCs originated from sugarcane juice or syrup. B-heavy molasses accounted for around 47%, totaling 2.33 billion litres, while the remainder, approximately 1.30 billion litres, came from grain-based sources. C-heavy molasses contributed 0.06 billion litres.
The substantial price hike is aimed at boosting ethanol production from C-heavy molasses, which involves the least diversion of sugar. For the 2023-24 ethanol supply year, an estimated 5.62 billion litres are promised to OMCs, with around 2.69 billion litres expected from sugarcane-based molasses and 2.92 billion litres from grains.
In the same period, India’s net sugar production (accounting for diversion for ethanol) is projected to be approximately 29 million tonnes, a decrease from the 33 million tonnes recorded in the previous year.
Ethanol production in India is sourced from various inputs, including sugarcane-based molasses, grains, and other raw materials. The decision to refrain from further diverting sugar for ethanol production is particularly evident in the context of the 2023-24 season, where the government anticipates a marginal surplus in sugar production compared to consumption.
In response to the announced incentive of Rs 6.87 per litre for ethanol from C-heavy molasses, industry leaders appreciate the initiative but advocate for further increases to aid the industry amid uncertainties. M Prabhakar Rao, president of the Indian Sugar Mills Association, emphasized the need for additional support to ensure timely cane price payments, mitigate losses, and augment ethanol production.
Rao also reiterated the industry’s appeal for an immediate ban on the export of molasses. Uppal Shah, co-founder and CEO of AgriMandi.live Research, welcomed the announcement made by OMCs.