Ethanol Sale Helps Sugar Mills Earn Additional Income & Clear Cane Arrears To Farmers

The sale of ethanol by sugar mills to oil marketing organisations helped them generate additional money and settle cane price arrears with farmers, according to the Department of Economic Affairs' annual Economic Survey, which was presented to Parliament on Monday. 

Sugar mills/distilleries produced revenue of over 35,000 crore from the sale of ethanol to oil marketing corporations in the four sugar seasons ending 2020-2021, according to the department, which helped eliminate the sugar cane price arrears owing to farmers. 

The Centre had taken a number of efforts to manage excess sugar output and improve mill liquidity, including incentivizing sugar mills to shift extra sugar cane/sugar to ethanol production and giving financial help for mill transportation to encourage sugar export. 

In the sugar season 2020-2021, almost 70 lakh tonnes of sugar were exported, compared to 59.6 lakh tonnes the previous season. In the current season, which ends in September, contracts for the export of around 30 lakh tonnes of sugar have already been inked. 

India is the world's largest sugar consumer and second-largest producer. Sugar cane output averages over 35.5 crore tonnes per year, which is used to make roughly three crore tonnes of sugar. In 2020-21, domestic consumption is expected to be around 2.6 crore tonnes. India has been a surplus producer of the culinary staple over time. 

Sugar output in the current 2021-22 (October-September) season is expected to be higher than earlier projections at 314.5 lakh tonnes, according to the Indian Sugar Mills Association (ISMA), the industry's major trade body. In its initial advance projections in October, the ISMA predicted sugar output at around 305 lakh tonnes. 

According to the most recent forecasts, the distillery capacity expansion will divert an additional 4 lakh tonnes of sugar equivalent to ethanol production in the current season. Previously, based on mill bids and as completed by the Oil Marketing Companies (OMC), around 30 lakh tonnes of sugar equivalent were scheduled to be diverted for ethanol production till the end of January 2022.