The Indian Sugar Mills Association (ISMA) has urged the government to implement a comprehensive revision of ethanol prices derived from sugarcane juice and B-Heavy molasses.
With no price revision in the past two years, the industry faces rising production costs, impacting financial stability and farmer payments.
Significant Investments in Ethanol Production
The sugar industry has made substantial investments of approximately ₹40,000 crore in ethanol production over the last five years, doubling its capacity to 850 crore liters. The sector is prepared to expand further and meet the government’s ethanol blending targets.
Rising Input Costs Demand Ethanol Price Adjustment
Ethanol prices from sugarcane juice and B-Heavy molasses were last revised in the 2022-23 Ethanol Supply Year (ESY).
However, the Fair and Remunerative Price (FRP) of sugarcane has increased twice since then, rising by ₹350 per ton to ₹3,400 per ton for the 2024-25 season – an overall increase of 11.5%.
The rise has significantly impacted ethanol production costs, necessitating a proportional increase in ethanol procurement prices to maintain financial viability and ensure timely payments to farmers.
Advocating for an FRP-Linked Ethanol Pricing Formula
ISMA recommends that the government adopt an ethanol pricing formula linked to the FRP of sugarcane.
A structured, formula-based approach will ensure ethanol prices reflect input cost increases, as done in previous price determinations.
Aligning ethanol procurement prices with sugarcane FRP will help stabilize the industry and secure timely payments to farmers.
Government Support Crucial for Future Ethanol Expansion
For the industry to continue its role in achieving ethanol blending targets beyond E20, strong government support is essential.
Without a viable pricing structure, sustaining investments and long-term growth in ethanol production will become challenging.
Call to Action
ISMA urges the government to promptly revise ethanol prices from sugarcane juice and B-Heavy molasses.
According to the press release, the adjustment will ensure the sector remains financially viable. It will also protect investments and guarantee that farmers receive timely payments.
