ISMA demands increase in price of ethanol made from B & C heavy molasses

On December 7, the government banned use of sugarcane juice and sugar syrup for ethanol production in the 2023-24 ethanol supply year (November-October) due to likely fall in domestic sugarcane production.

Indian Sugar Mills Association (ISMA) has demanded the government to give compensatory increase in the price of ethanol made from B and C heavy molasses, to compensate losses to be incurred by mills due to the ban on use of sugarcane juice for ethanol production. On December 7, the government banned use of sugarcane juice and sugar syrup for ethanol production in the 2023-24 ethanol supply year (November-October) due to likely fall in domestic sugarcane production. But permitted using B and C heavy molasses and foodgrains subject to a monthly review.

While acknowledging the government's intent to balance the needs of consumers, ISMA has proposed specific measures to ensure a smooth transition, minimize potential disruptions and support the farmer. "Because of this pause, the crushing capacity of sugar mills will come down drastically leading to delay of the crushing season resulting in loss, not only to the mills but more importantly to the farmers, whose payments get stretched and at the same time who are not able to clear the sugarcane field in time for further use," it said in a statement.

Among key measures proposed, ISMA said the government should consider compensatory increase in pricing for ethanol derived from B and C heavy molasses. This will ensure sufficient cash flow for sugar mills to fulfil their financial obligations to farmers. The government has fixed the price of ethanol from C heavy molasses route at Rs 49.41 per litre and from from B heavy molasses route be at Rs 60.73 per litre.

To maintain continuity of ethanol supply for the ethanol blending programme, ISMA has suggested allowing the conversion of the remaining contracted/cancelled juice quantity to B-heavy molasses. This will provide the oil marketing companies with additional ethanol without significantly affecting sugar production. To avoid abrupt disruptions and ensure a smooth transition, ISMA has requested permission for distilleries to continue processing existing juice stock to ethanol until December 10, with the produced ethanol to be supplied to the oil marketing companies until December 20.

"The association believes that the proposed measures will facilitate a smooth adaptation to the recent order while ensuring the continued success of the programme," ISMA said. ISMA said it remains committed to working closely with the government and other stakeholders to find solutions that benefit farmers, consumers, oil marketing companies and the sugar industry as a whole.

The country's sugar output is likely to decline to 32.3-33 million tonnes in the 2023-24 season (October-September), as against 37.3 million tonnes in the previous season, as per the food ministry estimate.