BLEND IT TO FIX IT

Ethanol blending promises to open up a sizeable market for the domestic sugar industry to utilise excess production, without hurting farmer interest

- SUMANT BANERJI

THE ETHANOL SOLUTION

The sugar industry keeps facing the problem of oversupply every few years due to subsidies and assured purchase price

Mills struggle to pay farmers because they have to buy a minimum quantity of sugarcane in their catchment areas even if there is no demand

The target of 10 percent ethanol blending by 2022 is expected to absorb excess supplies and help both farmers and mills. It will also reduce imports of petrol

Midway through his address at the annual congregation of the domestic sugar industry in December 2020, Piyush Goyal, Union Minister for Commerce and Railways, said something that cast a pall of gloom on the occasion. Goyal said the industry should forget about reduction of the fair and remunerative price (FRP), the reference price set by the government every year which sugar mills are obliged to pay farmers.

The industry has been demanding for years that FRP should be linked to sugar prices that move according to demand and supply. This was advocated by the Rangarajan Committee way back in 2012. Reducing FRP, however, could mean a fall in income for farmers, something no government can afford.