Agri Business

₹500-cr fund mooted for ethanol production in Maharashtra

Rahul Wadke Mumbai | Updated on June 11, 2019 Published on June 11, 2019

More ethanol production capacities to be set up in newer regions, according to Indian Sugar Mills Association. Representation image   -  Bloomberg

The Sugar Commissioner of Maharashtra has recommended to the State government that ₹500 crore be made available to cooperative sugar mills in the State for developing infrastructure and creating capacity for ethanol production.

Sugar Commissioner Shekhar Gaikwad told BusinessLine that due to excess sugarcane on the ground, the sugar inventory has been piling up and it can last up to next two-and-half years in Maharashtra. But due to depressed international prices of sugar, paying Fair and Remunerative Prices (FRP) to the farmers has also become a challenge.

Alternate use of cane

Sugar consumption over the years is bound to reduce because of health reasons. Therefore, other uses of sugarcane have to be found. Ethanol can be the answer by directly processing the sugar juice in the mill for ethanol production, he said.

Gaikwad said that with ethanol production, it would be possible for mills to pay the FRP to farmers.

For sugar mills with cane crushing capacity of 500 tonnes per day, about ₹48.49 crore will be the project cost. For big plants with 2,000 tonnes per day capacity, the cost will come to about ₹126.85 crore.

Out of the total project cost, 30 per cent could be contributed by State government as equity, 10 per cent will come from the mill and the rest from banks and financial institutions. A detailed presentation has been made to Chief Minister Devendra Fadnavis.

The Sugar Commissioner pointed out that in the sugar season for 2017-18 and 2018-19, the country-wide production has been above 320 lakh tonnes a year but the sale has been only 260 lakh tonnes. Excess inventory is putting pressure on sugar prices.

Due to the Fair and Remunerative Price (FRP) order of the Centre, mills have to pay the FRP rates to farmers, which has resulted in sugar price of ₹3,100 per quintal in the market. But in the international market, the prices are ₹1,900 per quintal.

As a result, the mills in the State, who draw about 80 to 85 per cent of the revenue from sugar sale, find it difficult to pay FRP to farmers. Rest of the revenue is drawn from co-generation and other sources. The increase in area under sugarcane, planting of new sugarcane varieties, which have higher sugar content, and advanced technology have resulted in higher sugar output in the State but the mills are incurring losses, he said.

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Published on June 11, 2019
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