Sugar manufacturers’ association urges govt to hike ethanol prices after two-year freeze

In a letter to the CACP chairman, ISMA Director General Deepak Ballani wrote, “Given that the cost of cane is a major input cost for the sugar industry, it is crucial to align the FRP of sugarcane with the Minimum Selling Price (MSP) of sugar and ethanol procurement prices.”

The Centre fixes prices of ethanol produced from sugarcane and its byproducts in three categories— ethanol from C-heavy molasses, ethanol from B-heavy molasses and ethanol from sugarcane juice/sugar/sugar syrup.

While the administered ex-mill price of ethanol derived from C-heavy molasses was revised upward to Rs 57.97 per litre for the ethanol supply year (ESY: November-October) from Rs 56.58 per litre last year, the government has not revised the procurement prices of ethanol produced from B-heavy molasses and sugarcane juice/sugar/ sugar syrup.

The last time the government revised the procurement prices of ethanol produced from B-heavy molasses and sugarcane juice/sugar/ sugar syrup was in November 2022. Since then, they have remained stagnant at Rs 60.73 per litre and Rs 65.61 per litre, respectively, said Ballani.

The data available with the ISMA shows that procurement prices of ethanol produced from C-heavy molasses have increased from Rs 49.41 per litre in the ESY 2022-23 to Rs 56.28 per litre in 2023-24 and Rs 57.97 per litre in 2024-25. Ethanol is also produced from damaged foodgrains, maize and surplus rice.

Of these, prices of ethanol produced from damaged foodgrains have been increased to Rs 64 per litre from Rs 55.54 per litre in 2022-23 and for ethanol produced from maize, prices have increased from Rs 56.35 per litre to Rs 71.86 per litre. However, the prices of ethanol derived from surplus rice have remained stagnant at Rs 58.50 per litre since 2022-23.

Speaking to The Indian Express, Ballani said, “Ethanol prices for sugarcane juice and B-heavy molasses were last revised in the 2022-23 ethanol supply year. Since then, the FRP of sugarcane has been raised twice, totalling an increase of Rs 350 per tonne, reaching Rs 3,400 per tonne for the 2024-25 season—an overall increase of approximately 11.5 per cent.”

“Given this increase, ethanol procurement prices should have been revised accordingly to ensure fair compensation for the sugar sacrificed in ethanol production. Without this adjustment, ethanol production will become financially unviable, impacting industry stability and delaying timely payments to farmers,” he said.