Rice use for ethanol may rise as maize, sugarcane acreage falls this Kharif season

Synopsis

India is set to ramp up rice utilization for ethanol production this year, amid reduced planting of maize and sugarcane, raising concerns about feedstock availability. Fortunately, the government maintains a healthy stock of rice, offering a safety net. With sugar prices soaring to unprecedented levels due to crop output fears, this strategy aligns with India's ambitious goal of achieving a 20% ethanol blending ratio.

New Delhi: India may have to rely more heavily on rice for ethanol production this year as lower kharif acreage under maize and sugarcane raises concerns over feedstock availability, according to senior sugar industry executives.

The contribution of rice towards ethanol production may rise by around 15-20% in the current season, said senior industry executives. At present, rice accounts for about 26.79% of ethanol feedstock, while sugarcane contributes roughly 28%. While maize planting is down around 4%, that of cane is down 0.85%, according to government's latest data.

The shift assumes significance as sugar prices have climbed to record levels amid concerns over the next crop. Weak rainfall in Maharashtra and Karnataka, two of the country's largest sugarcane-producing states, has raised the risk of lower output next year.

The government is expected to ask sugar mills cap ethanol production from sugarcane juice and B-heavy molasses, instead move towards grains.

Rice availability remains comfortable as the government's rice stocks, including unmilled paddy, stood at a record 68.43 million tonnes as of June 1, well above the government's buffer requirement of 13.5 million tonnes for July 1.

With India targeting 20% ethanol blending in petrol, a reduction in ethanol availability from sugarcane could require greater use of grain-based feedstocks such as rice and maize. Adequate grain stocks could provide some cushion, though any decline in crop yields could also put upward pressure on food prices. "This year is marked by lower rainfall, raising concerns about higher food prices in the coming months," a senior industry executive said, adding that delayed and below-normal rains have affected planting of several crops, and could further affect the yields too. Sugar prices in India have risen to record high over the past month and could remain elevated over the next few months during the festival season. The government has already restricted sugar exports and recently imposed stockholding limits on traders as it seeks to contain domestic prices and ensure adequate availability.

At the same time, the food ministry has earmarked 72 lakh tonnes of rice from government stocks for distilleries for the next ethanol supply year, up from 52 lakh tonnes allocated in 2025-26. An additional 55 lakh tonnes of 100% broken rice has also been made available through e-auctions which ethanol manufacturers can procure.

It could also provide the government with a more stable feedstock base as it evaluates the scope for raising ethanol blending beyond the current 20% level.