In a major step to increase the income of sugarcane farmers, Modi government has increased the price of ethanol. The state run oil marketing companies- Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) purchase sugarcane produced ethanol from farmers.
The raw material used for production of ethanol includes sugarcane juice, sugar beet, sweet sorghum and starch containing materials such as corn, cassava, and damaged grains, such as rotten potato, wheat and broken rice.
Therefore, the increase in the price of ethanol will help the sugarcane farmers to get better return for the produce. The price of ‘C’ heavy molasses and ‘B’ heavy molasses has been increased by 29 paise per litre and 1.84 rupees per litre respectively. The government also fixed the price of ethanol from sugarcane juice, sugar and sugar syrup at 59.48 rupees per litre.
The production of sugar increased exponentially in the last few years but the consumption remains low at domestic end. This resulted in pile up of sugar in the country and prices have crashed. Therefore the government is seeking other means like exports and use sugar for ethanol production to support sugarcane farmers.
In its National Biofuel Policy 2018, the government announced that the state run old companies will blend (5-10 percent) sugarcane produced ethanol with petroleum. It will help the government to save money on oil imports, and the excessive sugarcane will also be consumed.
“India has saved forex worth 4,000 crore in the last financial year due to savings from ethanol blending programme. The government aims to increase these savings to 12,000 crore per annum over the next four years,” said PM Modi last year. “We also aim for an earning of 20,000 crore solely through conversion of sugarcane to ethanol. This amount will aid the income of farmers. The Centre also wants more agrarian produce such as potatoes and agrarian waste to be converted into ethanol and we are working towards the same,” he added.
Previously, the government announced sugar export subsidy of 6,268 crore rupees to encourage exports in global markets. Another step to support sugarcane farmers was creation of 4 mt sugar buffer stock with an estimated cost of 1,674 crore rupees.
The government has been trying to solve the issue of sugarcane farmers’ excessive produce by promotion of ethanol blending. In a season when farmers have good produce, price crashes to a new low due to excessive supply; the reason for this being limited availability of warehousing and transportation facilities in the country. Now with excessive produce going to ethanol refineries farmers do not have to sell their produce at throw-away prices.
Sugarcane is a major crop in India with production touching 30 million tonnes by March 2018. The country is the largest producer of sugarcane after Brazil which produces more than double of India’s output due to its sheer landmass and better techniques.
The BJP governments will seek reelection in two major sugarcane producer states- Maharashtra and Haryana. Maharashtra is the second largest producer of sugarcane after UP and the sugarcane farmers of the state have political clout in the state. The series of steps to support sugarcane farmers will help the party in getting reelected.