NEW DELHI: To maintain enough sugar availability in the domestic market in the election year, the government has directed not to use 'sugarcane juice and sugar syrup' for ethanol production in 2023-24. However, the government has allowed B molasses (second molasses) for ethanol production from December onward. India mixes ethanol with petrol to reduce its dependence on fossil fuels.
The government speculated that adverse weather conditions due to El Nino may impact sugarcane production. Traders and Commodity analysts speculate that in the current sugar season, there would be a 12 percent deficit in sugar production. In the last sugarcane crushing season 2022-23, the total sugarcane production was 33.1 million metric tonnes. It is estimated that this year the production will be 29.1 mmt. Last year, 4.4 mmt of sugar was diverted for ethanol while this year it was estimated as 4 mmt for diversion.
In October, the government further extended a curb on the export of all kinds of Sugar (raw sugar, white sugar, refined sugar, and organic sugar) beyond October 31, 2023.
The sugarcane crushing season starts from October 2023 to September 2024. The below-normal rainfall and record deficit monsoon in major sugar-producing regions like Maharashtra and Karnataka has impacted the Sugarcane crop which is known as water-guzzling.
In its order, Sangeet, Director of sugar) directed all sugar mills and sugar syrup distilleries not to use sugar and sugar juice for ethanol manufacturing but to use B-Heavy molasses for the manufacturing of ethanol.
The directive was issued as per clauses 4 and 5 of the Sugar (Control) Order 1966. "Supply of ethanol from existing offers received by Oil Marketing Companies (OMCs) from B-Heavy molasses will continue," the Food ministry said in the letter.
The sugar industry welcomed the order to allow B-Heavy molasses for ethanol. Ethanol manufacturing is a profitable proponent for sugar mills. But in the election year, the government is not in the mood to take risks as sugar production would fall.
“The government has resolved the concern of industry as there is a huge stock of ethanol made from B-molasses lying in the country apart from contracted quantities,” says Prakash P Naiknavare, Managing Director, the National Federation of Cooperative Sugar Factories. However, Naiknavare also underlined the ambiguity in the letter. that states supply of ethanol from "existing offers" received by OMCs from B-Heavy molasses will continue. "Will it be withdrawn after the existing tender is over? There is no clarity," he asked.
Also, some units have been built for making ethanol from sugarcane juice and sugar syrup alone. These units will become sick if they remain non-operational, he added.
India exported 61 lakh tonnes of sugar during the 2022-23 marketing year, as against a record 112 lakh tonnes in the previous year. The government has not yet allowed exports for this marketing year.