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. The government banned the use of sugarcane juice and sugar syrup for ethanol production in the 2023-24 ethanol supply year (November-October) to prevent a likely fall in domestic sugarcane production. However, the government permitted the use of B and C heavy molasses and foodgrains subject to a monthly review.
ISMA has acknowledged the government’s intent to balance the needs of consumers and has proposed specific measures to ensure a smooth transition, minimize disruptions, and support the farmers. The association stated that the ban on using sugarcane juice for ethanol production will lead to a drastic reduction in the crushing capacity of sugar mills, resulting in delays in the crushing season and financial losses for both the mills and farmers. The delayed payments to farmers and the inability to clear the sugarcane fields in time for further use are additional concerns.
To address these issues, ISMA has suggested that the government consider a compensatory increase in pricing for ethanol derived from B and C heavy molasses. This will provide sufficient cash flow for sugar mills to fulfill their financial obligations to farmers. The government has set the price of ethanol from B heavy molasses at Rs 60.73 per litre and from C heavy molasses at Rs 49.41 per litre.
ISMA has also proposed allowing the conversion of the remaining contracted/cancelled juice quantity to B-heavy molasses to maintain continuity of ethanol supply for the ethanol blending program. This will provide oil marketing companies with additional ethanol without significantly affecting sugar production.
To ensure a smooth transition and avoid abrupt disruptions, ISMA has requested permission for distilleries to continue processing existing juice stock to ethanol until December 10. The produced ethanol can then be supplied to the oil marketing companies until December 20.
ISMA believes that the proposed measures will facilitate a smooth adaptation to the recent order while ensuring the continued success of the ethanol blending program. The association 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.
According to the food ministry estimate, the country’s sugar output is expected to decline to 32.3-33 million tonnes in the 2023-24 season, compared to 37.3 million tonnes in the previous season.
