Cargill India keen to invest in corn-to-ethanol facilities in India

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Updated: November 26, 2020 9:35 AM

Cargill India is keen to invest in facilities to produce ethanol out of corn but would wait for a clear policy on the green fuel, as the current schemes of the government are skewed in favour of sugar mills.

The company would take a call after assessing how attractive is the ethanol policy once it is announced.

Cargill India is keen to invest in facilities to produce ethanol out of corn but would wait for a clear policy on the green fuel, as the current schemes of the government are skewed in favour of sugar mills. An unbiased ethanol policy may help the government to achieve diversification to corn from water-guzzling paddy and sugarcane and also help farmers to increase their income due to sustainable demand.

“We are producing ethanol out of corn in the US and it is a big part of our business there. We are looking at opportunities here, depending on the government policy,” Cargill India’s president Simon George told Financial Express. He said the company would take a call after assessing how attractive is the ethanol policy once it is announced. The all-India weighted average price of corn was Rs 1,307/quintal during October 1-November 24, which is nearly 30% lower than its minimum support price (MSP).

Many other companies like Cargill are waiting for the ethanol policy as the current one allows ethanol made out of only molasses (produced by sugar mills) to be eligible for buying by oil marketing companies (OMCs) under the blending programme. Though the government has allowed ethanol production out of grains, there is no such policy like sugar mills for it.

The government last month hiked by Rs 1.94-3.34/litre in the reserve prices of different categories of ethanol to be purchased by OMCs under the ethanol blending programme (EBP) during the 2020-21 season (December-November) to help sugar mills earn more and clear the cane dues of farmers. The declining realisation from sugar sales over the last few years have forced the sugar factories to diversify into the green fuel.

Though ethanol procurement by the public sector OMCs has increased over the last few years, it is far below the annual target of 460 crore litre to achieve 10% blending with petrol. The OMCs had purchased 38 crore litre of ethanol in 2013-14 season (ethanol season runs from December to November) while the contracted quantity was about 195 crore litre in 2019-20. The Centre has notified administered price of ethanol since 2014 to help improve the blending to reduce pollution as well as help sugar mills clear cane dues of farmers. Earlier it used to be one price for all categories of ethanol, but starting from 2018 differential prices of ethanol-based on raw material utilized for its production were introduced.

“Ethanol (production) we are not doing currently, but it is in our list of things to look at as we have the technology,” said George. The food and petroleum ministries are believed to have agreed that grain-based distilleries should be included under the ongoing scheme of extending subsidised loans to boost ethanol production as currently, it is available only to sugar mills

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