Indian Government to Hold Ban on B-Heavy Molasses Amidst Ethanol Production Concerns

The government may maintain the ban on B-heavy molasses (BHM) as a feedstock for ethanol production. Despite ample sugar reserves, concerns over potential fluctuations in sugar prices due to sentimental value may lead authorities to refrain from lifting the ban, even as distilleries clamor for relaxation.

Political Timing and Electoral Concerns Stall Decision

Media speculations suggest that while the government acknowledges the rationale behind allowing BHM for ethanol production, the looming Lok Sabha elections have become a significant factor in delaying any decision. The ruling party, wary of unsettling the populace or inciting unrest that could impact electoral outcomes, opts for cautious decision-making.

Storage Costs and Post-Harvest Considerations

Apart from political considerations, industry experts suggest that delaying the ban lift for a couple of months or until after the elections wouldn't cause harm. Sugar mills and distilleries typically maintain stocks of BHM for processing after the sugarcane crushing season, which concludes in April across various states. The current stockpile of approximately 8 lakh tonnes of BHM held by distilleries and sugar mills could yield around 25 crore litres of ethanol, according to industry estimates.

Implications for Ethanol Production and Industry Dynamics

The ban on using BHM for ethanol production, imposed by the government in December 2023, aimed to ensure sufficient sugar availability for domestic consumption. However, the ethanol supply year (ESY), running from November to October relies heavily on the availability of feedstocks such as BHM and C-heavy molasses (CHM). With the ban in place, sugar mills are forced to rely on CHM, which yields significantly less ethanol due to its lower sucrose content, impacting both ethanol production volumes and sugar yields.

Regulatory Measures and Industry Compliance

In December of the preceding year, the Food Ministry issued comprehensive guidelines for ethanol and spirit production during the 2023-24 sugar season, emphasizing strict enforcement of the ban on using BHM and sugarcane juice/syrup for ethanol production. The move aimed to regulate feedstock usage and streamline production processes amidst ongoing concerns over ethanol supply and sugar market dynamics.

Diverse Feedstock Options and Industry Dynamics

While BHM and CHM traditionally served as primary feedstocks for ethanol production, industry players are exploring alternative options such as surplus rice, currently not allowed, and damaged food grains like broken rice and maize. The choice of feedstock significantly influences ethanol yields and sugar production dynamics, with BHM favored by sugar mills due to its dual benefit of ethanol and sugar yields.