An Ambitious Ethanol Plan Spurs Food Security Fears in India

by Bibhudatta Pradhan and Pratik Parija (Bloomberg) Modi advances target for use of 20% ethanol-blended gasoline; Biofuel makers buying rice meant for poor at subsidized prices -- India’s ambitious plan to cut the use of fossil fuels by promoting ethanol derived from rice, corn and sugar is drawing criticism from some experts who warn the move could undermine food security in the world’s second-most populous country.

In June, Prime Minister Narendra Modi’s administration accelerated the nation’s ethanol goal by five years, seeking to double production and to have gasoline 20% blended with the spirit by 2025. To help meet the target, the government is offering financial assistance to biofuel producers and faster environmental clearances. The plan is also resulting in the diversion of food grains meant for the poor to companies at subsidized rates.

Even as many developed countries debate limiting policy support for grain-based biofuels amid reports of food-price increases and greenhouse gas emissions from deforestation, India is seeing multifold benefits. The government argues that the new target will help the world’s third-largest oil consumer save 300 billion rupees ($4 billion) annually by cutting crude imports, reduce carbon emissions and boost farmers’ incomes.

But critics say it’s a self-goal for a country that’s struggled for years to feed its poor. Though the Green Revolution helped boost farm yields and turn India into a net exporter of wheat and rice, it still ranks 94th on the Global Hunger Index 2020 comprising 107 nations.

The report that maps out the new ethanol-blending target primarily focuses on food-based feedstocks, with the government saying the program is a “strategic requirement” in light of grain surpluses and wide availability of technologies. Yet the blueprint is a departure from the 2018 National Policy on Biofuels, which prioritized grasses and algae; cellulosic material such as bagasse, farm and forestry residue; and, items like straw from rice, wheat and corn.

“India has a real opportunity here to become a global leader in sustainable biofuels policy if it chooses to refocus on ethanol made from wastes,” said Stephanie Searle, fuels program director at the International Council on Clean Transportation. “This would bring both strong climate and air quality benefits, since these wastes are currently often burned, contributing to smog.”

State reserves stood at 21.8 million tons of rice as of Sept. 1, against a requirement of 13.54 million tons, according to the food ministry. The blending plan would benefit corn and rice farmers, while addressing the issue of surplus, Pandey said.

Some critics are concerned that food grains meant for the impoverished are being sold to distilleries at prices cheaper than what states pay for their public distribution networks. Many ethanol producers are getting rice at 2,000 rupees per 100 kilograms (220 pounds), which compares with an estimated 4,300 rupees Food Corp. of India pays to stock up the grain. READ MORE

Excerpt from MSN/BusinessToday.IN: The Ministry of Petroleum & Natural Gas said on Thursday that India's ambitious Ethanol blending plan will not affect the country's food security as meeting food grain demand is the top focus of the government. Noting that certain reports linked the Ethanol plan with food security fears in the country, the ministry categorically stated that they (reports) are unfounded, malicious and bereft of facts.

“Fuel demand is ever rising in the country and increasing dependence on crude oil imports can grossly hamper our future growth potential. Developing in-house fuels like ethanol, biodiesel, compressed biogas (CBG) has the potential to turn around the energy sector.” the ministry said.

During the last six years, the government has injected Rs.35,000 crore in the liquidity starved sugar industry by allowing the conversion of surplus sugarcane-based raw materials for ethanol production.

This has helped in improving cane farmers’ financial position. For the on-going season, it is expected that more than Rs 20,000 crore will be injected through the ethanol blending programme alone, which will fuel growth in the rural economy.

It is to be noted that only the surplus quantities of sugar are diverted for ethanol production, which would otherwise have to be exported at subsidised rates to other countries.

The government has also allowed for the conversion of surplus stocks of rice with Food Corporation of India (FCI) for ethanol production. It has also allowed the conversion of coarse grains like maize for ethanol production.

Despite distributing free rice and other grains during COVID-19, the FCI still holds huge stocks of rice. Moreover, an enhanced quantity of fresh rice stocks will start coming in as the agriculture season has been very good.

Higher conversion of maize to ethanol will also enable higher cattle feed production across the country which will aid the rural economy. This will also encourage farmers to switch crops and change their crop pattern in view of additional demand generated by the diversion of food grains to fuel.

Allowing alternative use to rice and maize will not only help aiding price stability to the farmers for their output but also enable new investment in distilleries and allied infrastructure.

This initiative also goes with the Prime Minister's Atmanirbhar Bharat initiative. It reduces the country’s dependence on imported crude oil, consumes our own produced environment-friendly fuel and pays remunerative prices to the Industry and Farmers. READ MORE