Grain-based ethanol producers seek revision in prices, supply rules for 2026-27
Grain-based ethanol producers have urged the Centre to revise ethanol pricing and procurement rules for 2026–27, warning that lower maize ethanol prices and increased rice-based supplies could hurt factory profitability and farmers’ earnings. Industry representatives are particularly concerned about rising maize costs and reduced procurement orders.
New Delhi: Grain-based ethanol producers have urged the Central government to revise ethanol purchase prices and supply rules for the 2026-27 year, warning that the current policy could affect maize-based ethanol factories and reduce farmers’ earnings.
The government has decided that oil marketing companies (OMCs) will not purchase ethanol made from sugarcane juice, sugar syrup and B-heavy molasses during the November 2026-October 2027 period. The decision has raised concerns among grain-based ethanol producers about the impact on the industry and the distribution of orders among different raw materials, Financial Express reported.
C.K. Jain, president of the Grain Ethanol Manufacturers’ Association (GEMA), said the purchase price of ethanol made from maize had been reduced from Rs 71.86 to Rs 68.86 per litre. He warned that the reduction could make it difficult for maize-based ethanol factories to operate profitably and affect farmers’ income.
Jain also expressed concern over the prices offered for ethanol made from rice-based materials. The latest government tender has fixed the purchase price at Rs 60.32 per litre for ethanol made from surplus rice supplied by the Food Corporation of India (FCI) and Rs 64 per litre for ethanol made from damaged foodgrains. He said this pricing could reduce the demand for maize in ethanol production.
Industry representatives said maize prices had increased to around Rs 27 per kg from Rs 18 per kg a year ago, adding to the financial pressure on manufacturers. They are also concerned that maize-based ethanol producers may receive fewer orders because the government gives preference to suppliers quoting lower prices.
According to industry estimates, ethanol production using damaged foodgrains and broken rice could increase sharply. Their combined production is expected to rise from around 800 million litres last year to more than 7,000 million litres in the current supply year.
Jain said the availability of broken rice would play an important role in meeting ethanol requirements, although its contribution to ethanol production had historically remained below 1,000 million litres.
Industry representatives fear that greater supplies of ethanol made from broken rice, priced at Rs 64 per litre, could increase competition for maize-based producers. This may force maize ethanol manufacturers to reduce their prices, eventually affecting the rates paid to farmers for maize.
The Food Ministry had earlier stated that allowing maize to be used for ethanol production had created a dependable market for farmers and helped them secure better prices.
During the 2024-25 ethanol supply year, around 13.11 million tonnes of maize was used for ethanol production, compared with nearly 5 million tonnes of broken rice and surplus rice supplied by the FCI.
Last month, Bharat Petroleum Corporation Ltd (BPCL), on behalf of the OMCs, invited bids for the supply of 11,000 million litres of ethanol during 2026-27 to achieve the target of blending 20% ethanol with petrol. The tender allows manufacturers to supply ethanol made from maize, broken rice, surplus rice supplied by the FCI and C-heavy molasses, which contains less sugar.
The government’s decision to exclude sugarcane juice, sugar syrup and B-heavy molasses from ethanol purchases is aimed at preventing sugar diversion amid concerns over a possible decline in sugarcane availability and sugar production.
BPCL has extended the deadline for submitting bids to November 5, 2026, from the earlier date of October 29.
Industry estimates show that sugar-based raw materials supplied around 2,750 million litres of ethanol, accounting for 26% of the total supply during 2025-26. Grain-based sources contributed around 7,610 million litres, or 74%. Of this, 5,180 million litres came from maize and 3,050 million litres from rice, according to industry sources.
The FCI supplies surplus rice for ethanol production only after meeting the requirements of the National Food Security Act, other welfare schemes and maintaining the required reserve stocks. The corporation had stopped supplying rice for ethanol production during the 2022-23 supply year.
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Source : ChiniMandi
