India Halts Ethanol Procurement from Sugar Amid El Niño Impact
In response to adverse weather conditions affecting sugarcane yields, India has suspended ethanol procurement from sugar sources for the upcoming supply year.
India's government has ordered a halt to ethanol procurement from sugarcane and sugar for the new supply year starting November 1.
The decision follows a significant drop in sugarcane production due to El Niño, leading to rising global sugar prices.
Ethanol suppliers can still offer products derived from alternative feedstocks like C-heavy molasses and damaged grains.
India has announced a suspension of ethanol procurement from sugar and sugarcane feedstocks, effective from November 1, 2023. This decision comes as the country grapples with reduced sugarcane production caused by dry summer weather linked to the El Niño phenomenon. The move aims to stabilize sugar prices in the domestic market, which have been affected by a global surge in sugar prices.
The directive was issued to state-owned fuel retailers, including major refiners such as Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. These companies have collectively issued a tender for nearly 11 billion liters of ethanol for the upcoming supply year, adhering to the new government guidelines. Notably, the tender explicitly excludes offers for ethanol derived from sugarcane juice, sugar, sugar syrup, and B-Heavy molasses.
India, recognized as the second-largest sugar producer globally, is facing a decline in sugarcane yields compared to the previous year. The El Niño effect has contributed to the weakest monsoon season in over a decade, exacerbating the situation. As a result, sugar availability has tightened, prompting the government to take measures to mitigate price increases.
The Indian government has been promoting the use of sugarcane and grains for ethanol production as part of its strategy to reduce reliance on imported oil and provide farmers with additional income. The target for blending ethanol into gasoline has been advanced to 2025, aiming for a 20% blend. However, with the current crop challenges, the focus has shifted to alternative feedstocks for ethanol production.
Looking ahead, suppliers in the recent tender can present ethanol sourced from C-heavy molasses, surplus rice, damaged food grains, and corn, among other approved materials under the National Policy on Biofuels. This shift in procurement strategy reflects the government's adaptability in addressing agricultural challenges while continuing to support the biofuels initiative.
