India maintains feedstock rice cost for ethanol

India will hold flat the price ethanol distilleries must pay for rice feedstocks during the 2021-22 fiscal year ending 31 March, in a move targeting to support grain-based ethanol production and farmers' incomes.

The Food Corporation of India (FCI) will continue to supply excess rice to distilleries at a cost steady from this year at 2,000 rupees/quintal ($270/t) during 2021-22, it announced on 1 May.

The decision was made to assure the industry of price stability and availability of the raw material, in a bid to spur investment in grain-based distilleries. To date, 422 new distillery projects have registered under India's Department of Food and Public Distribution loan aid scheme, of which around 200 plan to use grain-based feedstocks.

The government is keen to boost the number of distilleries using grains like rice for ethanol instead of sugarcane feedstocks typical in the country, to drive more even output and blending of the biofuel nationwide beyond key sugarcane-producing states Uttar Pradesh, Maharashtra and Karnataka.

India fixed the ex-mill price oil companies must pay for ethanol made from surplus FCI rice at Rs56.87/litre during the current December 2020-November 2021 supply year, above the price for product made from C-heavy molasses and damaged food grains but below that for B-heavy molasses and unrefined sugar feedstocks.

Encouraging distilleries to divert sugar, sugarcane juice and sugarcane syrup directly to ethanol production remains the government's ethanol policy priority, as it attempts to draw down the country's sugar glut.

It aims to blend 7.5-8pc ethanol in the gasoline pool nationwide during the 2020-21 supply year, up from around 5pc during 2019-20. The country is targeting a blend rate of 10pc by 2022 and 20pc by 2025.

By Lauren Moffitt