New Delhi,In a significant move, the central government has issued directives to all sugar mills, instructing them to cease the production of ethanol from sugarcane juice or syrup for the ongoing 2023-24 season. Instead, the government has permitted the production of ethanol from B-heavy molasses to address the anticipated decrease in sugar production.
The 2023-24 sugar season, commencing in October, has seen a shift in the government’s approach to ethanol production. This decision, negatively impacting sugar companies, has led to a decline in their stock values. Investors are concerned about the potential impact on ethanol realizations due to the increased focus on sugar production.
During the previous ethanol supply year (ESY) from December 2022 to October 2023, approximately 25% of the 4.94 billion liters of ethanol produced in India originated from sugarcane juice or syrup. In contrast, around 47% was derived from B-heavy molasses, and the remaining 1.3 billion liters came from grain-based sources.
The government’s directive for the current ESY is expected to divert over 2 million tonnes of sugar back into total supplies. Industry experts speculate that the absence of pricing details for sugarcane-based ethanol this season may be attributed to uncertainties regarding the impact on sugar supplies.
Ethanol production in India involves various sources, primarily sugarcane-based molasses and grain-based sources. The decision to restrict ethanol production from sugarcane juice aims to ensure an adequate supply of sugar for domestic consumption, especially considering the marginal increase in sugar production projected for the 2023-24 season.
Uppal Shah, Co-founder and CEO of AgriMandi.live Research, emphasized the significance of balancing sugar availability and meeting the ethanol blending target. With sugar production in the first two months of the season dropping by almost 10.5%, the government’s decision underscores the importance of strategic resource allocation in the face of evolving agricultural dynamics.
