Use of corn and rice for ethanol production has significantly increased

Over the past six years, there has been a significant increase in the use of rice, corn, and damaged grain crops for ethanol production. Corn has surpassed rice, which is sold by the Food Corporation of India (FCI) to distilleries under the Ethanol Blended Petrol (EBP) program.

According to data from the Ministry of Food presented by Lok Sabha on Wednesday, by the end of June of the current ethanol year 2025-26 (October to September), distilleries used just over 54 lakh tonnes of surplus rice and damaged grain crops (including broken rice) provided by FCI under the EBP program. Meanwhile, the volume of corn usage was approximately 68 lakh tonnes. There are still two months left until the end of the current ethanol year.

Raw Material Usage Dynamics

The data shows that in the ethanol years 2020-21 and 2021-22, corn was not used for ethanol production. After a modest start in the ethanol year 2022-23, when 8.3 lakh tonnes of corn were used, the figure rose to 75.4 lakh tonnes in the following year and reached 131 lakh tonnes in the ethanol year 2024-25, marking a record high. For comparison, in 2024-25, just over 50 lakh tonnes of surplus rice and broken rice from FCI were used for ethanol production.

Ministry Stance and Market Conditions

The Ministry stated that diversifying the raw material base for ethanol production, including the use of beet molasses, heavy milk products B and C, corn, damaged grains, and FCI surplus rice, has reduced dependence on any single type of raw material or crop and promoted agricultural diversification. Furthermore, the inclusion of corn as a raw material for ethanol production has helped farmers secure guaranteed markets and improve prices.

The Ministry clarified that FCI releases surplus rice for ethanol production after fulfilling the requirements of the Food Security Act and other social welfare programs, as well as maintaining buffer stocks. It should be noted that FCI suspended the supply of rice for ethanol in the ethanol year 2022-23.

Raw Material Requirements and Pricing

According to sugar industry data, for the ethanol year 2025–26, a total of 2890 million liters of ethanol, which accounts for only 28% of the total demand, must be procured from sugar-based raw materials. The remaining 72%, or 7610 million liters, must come from grain sources, with 4780 million liters attributed to corn (45%) and 2830 million liters to rice (22%).

On Tuesday, the government informed Rajya Sabha that FCI sold rice to distilleries for ethanol at a price of 2250–2320 rupees per quintal for June 2025–June 2026. This price was approximately 40% lower than its procurement cost of 3720–3889 rupees per quintal. FCI's average procurement cost includes the Minimum Support Price (MSP), as well as storage and maintenance costs.

business-standard.comJuly 29, 17:35

Government states that redirecting surplus rice to ethanol production does not affect food price growth

The government stated on Wednesday that using surplus broken rice for ethanol production does not impact the inflation of food commodities. Ethanol production is permitted only after ensuring sufficient buffer stocks and fulfilling the requirements set by the National Food Security Act (NFSA) and other social programs.

Rice Distribution Mechanism

In response to a question in Lok Sabha, the Minister of Food, Nimuben Jayantibhai Bambhaniya, explained that after maintaining buffer stocks and meeting needs under the NFSA, the government sells only surplus rice from the Central Pool under the Open Market Sale Scheme. These surpluses are then directed as raw material for ethanol production.

Use of Corn and Other Crops

Regarding the inclusion of corn as raw material for ethanol, the minister noted that this helped ensure a guaranteed market with higher prices for corn farmers. According to preliminary estimates for grain production in 2025–26, the projected volume of corn production in India will be 55 million tonnes, which is enough to meet the demand for ethanol production, poultry and cattle feed, as well as other needs.

The minister also reported that to maintain feed availability, the poultry feed industry uses other local ingredients such as rice husk, broken rice, bajra, and wheat waste.

Raw Material Usage Statistics

Furthermore, in her response, the minister indicated that during the 2024–25 ethanol production year, which concluded in November, approximately 13.1 million tonnes of corn was used for ethanol production, while the volume of surplus rice from the Food Corporation of India (FCI) was about 3.18 million tonnes. Recently, India has been producing ethanol from rice, corn, and sugarcane, with corn holding the largest share, surpassing sugarcane.