Tatsat Chronicle Magazine

Government Encouraging To Divert Excess Sugarcane For The Production Of Ethanol

December 15, 2022
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With a view to support sugar sector and in the interest of sugarcane farmers, government is encouraging sugar mills to divert excess sugarcane and sugar to ethanol production, informed The Union Minister of State for Consumer Affairs, Food and Public Distribution, Niranjan Jyoti in the Parliament.

Government has allowed production of ethanol from B-heavy molasses, sugarcane juice, sugar syrup and sugar and has also been fixing the remunerative ex-mill price of ethanol derived from various feed stocks. 

To achieve blending targets, the government is encouraging sugar mills and distilleries to enhance their distillation capacities for which they can avail of loans from banks for which interest subvention at 6% or 50% of the interest charged by the banks whichever is lower is borne by Government.

As the revenues generated from the sale of ethanol by sugar mills or distilleries reach to the accounts of sugar mills in around three weeks’ time as against three to 15 months taken from sale of sugar, production of ethanol would improve liquidity of sugar mills enabling them to make timely payment of cane dues of sugarcane farmers.

The minister informed that in a normal sugar season, production of sugar is around 320 to 360 Lakh Metric Tonne (LMT) as against the domestic consumption of 260 LMT, which used to result in huge carry over stock of sugar with mills. This excess stock used to lead to blockage of funds and affected the liquidity of sugar mills resulting in delayed payment of cane dues and resulting in accumulation of cane arrears.

In order to find a long term solution to address the problem of excess sugar, the government is encouraging sugar mills to divert excess sugarcane to ethanol. It has fixed target of 20% blending of fuel grade ethanol with petrol by 2025. In sugar seasons 2018-19, 2019-20, 2020-21and 2021-22 about 3.37, 9.26, 22 and 36 LMT of sugar respectively has been diverted to ethanol.

In current sugar season, about 45 to 50 LMT of excess sugar is targeted to be diverted to ethanol. By 2025, it is targeted to divert 60 LMT of excess sugar to ethanol, which would solve the problem of high inventories of sugar, improve liquidity of mills thereby help in timely payment of cane dues of farmers.

Also, with a view to improve the liquidity position of sugar mills and to enable them to make timely payment of cane dues of farmers, Central Government had taken various measures viz. extended assistance to sugar mills to facilitate export of sugar; extended assistance to mills for maintaining buffer stocks; extended soft loans to sugar mills through banks to clear cane price dues; fixed Minimum Selling Price of sugar etc.

In sugar seasons 2019-20, 2020-21 and 2021-22 about 59.60 LMT, 70 LMT and 109 LMT of sugar was exported respectively.
As a result of these measures, financial conditions of sugar mills has improved and more than 99% of cane dues up to sugar seasons 2020-21 and 97.40% of cane dues for sugar season 2021-22 have been cleared.