Government may stop use of sugarcane for ethanol production:Sugar prices rise 10%

Sugar prices in the country have reached record levels. To control this and increase domestic supply, the central government is considering limiting the use of sugarcane in ethanol production from the October season. This step will increase sugar production in the country, which will eliminate India’s need to import sugar. A final decision on this matter may be taken by the end of next month. Concerns rise due to low rainfall in Maharashtra Karnataka According to two government and two industry sources related to the matter, there has been low rainfall in Maharashtra and Karnataka, the country’s largest sugarcane-producing states. Due to this, there are concerns about a decline in sugar production next year. In case of declining production, prioritizing sugar supply over ethanol will provide relief to the domestic market. The government has not yet issued any response in this regard. Sugar supply will increase by 30 lakh metric tons This year, sugar mills diverted approximately 10% of total production, which is around 30 lakh metric tons of sugar, for ethanol production. If a ban is imposed on this diversion of sugarcane in the next season, then an equivalent amount of additional sugar could become available in the domestic market. This would compensate for the potential loss in production due to low rainfall. Sugar prices increased by 10% due to rising demand Ethanol will be made from corn and rice instead of sugarcane The government wants to continue its target of 20% ethanol blending. To compensate for the reduction in the quantity of ethanol made from sugarcane, the government will promote the use of corn and rice in ethanol production. The country currently has adequate stock of corn and rice. Only C-heavy molasses will be allowed to be used Sources with direct knowledge of the matter said that sugar mills will be prohibited from making ethanol from sugarcane juice and B-heavy molasses (high sugar by-product). Mills will be permitted to make ethanol primarily from C-heavy molasses only. This is a by-product from which most of the sugar has already been extracted. Allocation will be decided before the start of next season The ethanol allocation for the sugar industry for the marketing year starting from November will be finalized before the new season begins. After this, government oil companies will issue tenders for purchasing ethanol. The central government has already imposed a ban on sugar exports and last month also implemented stock holding limits for traders. Sugar mills’ earnings will not be significantly affected Industry officials say that the proposed new restrictions are unlikely to cause any major financial loss to the sugar industry. Mills are expected to earn more by making and selling sugar from sugarcane compared to making ethanol. What is B-Heavy and C-Heavy Molasses?