India, the world’s biggest consumer of sugar, is planning to increase ethanol production to protect mills from falling prices of the sweetener as the country expects a bumper crop next year, the Minister of Agriculture, Consumer Affairs, Food and Public Distribution Sharad Pawar said.
“Instead of producing other products, the industry should make more of ethanol,” Pawar said in an interview on May 3. “If they produce more ethanol and get a good price, farmers will also get a good price for their sugarcane.”
The government in 2007 made the sale of ethanol-blended petrol compulsory to help sugar mills cope with a slump in prices of the sweetener caused by a record harvest. Higher sales of the fuel next year may help makers of the sweetener supplement their earnings.
A panel of ministers last month asked refiners to buy ethanol from sugar mills at Rs 27 a litre for six months compared with Rs 21.5 earlier, Pawar said. The price will need approval of the cabinet, he said.
The government has provided loans of Rs 300 crore to sugar mills in the past three years to build additional annual ethanol production capacity of 365 million litres, according to the agriculture ministry.
The current capacity in the country is about 1.8 billion litres.
Net exporter
India, the biggest sugar buyer, may become a net exporter next crop year starting October as output is likely to exceed demand for the first time in three years, Pawar said.
Cane plantings in the country’s main growing states of Uttar Pradesh, Maharashtra and Karnataka have been “very good,” he said.
An increase in production of byproducts such as ethanol will help the government tide over any crisis that may arise due to excess production of sugar, he said.
India has been a net buyer of sugar since 2008 after cane growers switched to planting wheat and oilseeds, and last year’s drought ravaged crops, pushing prices in New York to a 29-year high in February.
Increased production of the sweetener from India may weigh on prices that have plunged 46 per cent this year on bets that rising supplies will erase a global deficit.
Refined sugar prices in Mumbai, India’s biggest wholesale market for the commodity, have fallen 30 per cent from a record Rs 4,050 a quintal on January 8 after the government extended duty-free imports of white sugar until December 31.
