Dented Corn Ethanol: A Game Changer for India’s Biofuel Sector

July 29, 2024

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by Dilip S. Patil (The Hindu Business Line) By integrating corn-based ethanol into its biofuel strategy, India can create a more secure, diversified, and sustainable ethanol production system -- India’s Ethanol Blending Program (EBP) aims to achieve 20 per cent ethanol blending by 2025, and diversifying ethanol feedstocks beyond sugarcane is crucial to meet this target. Dented corn ethanol, an unexplored resource, could revolutionize the biofuel sector in India. This blog explores the current state, implications, and potential for growth of dented corn ethanol in India. Dented corn ethanol represents a technologically mature and economically competitive pathway for India’s de-carbonisation and sustainable development. READ MORE

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Ethanol push turns India into corn importer, shaking up global market (Reuters)
Illinois Corn Marketing Board sees promise in ethanol exports (Brownfield Ag News)
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Excerpt from Zee Business: The government is considering a proposal to increase ethanol prices for the season starting November 2024, while also pushing for diversification of feedstocks, as it aims to achieve the 20 per cent blending target by 2025-26, sources said.

Meanwhile, Cooperation Minister Amit Shah called on sugar mills to explore alternatives to sugarcane for ethanol production, pushing for a multidimensional approach to biofuel manufacturing.

Shah emphasised the need for sugar mills to adopt a forward-looking approach, stating, "You need to be futuristic and look at opportunities and expand. ...Ethanol can be made from multiple sources."

The push for diversification comes as India seeks to reduce its dependence on fossil fuels and promote sustainable energy alternatives.

Amid this, Davangere Sugar Company Limited plans to produce Ethanol primarily from maize and other damaged grains until the crushing season begins in October 2024.

To maximize ethanol production, the Davangere Sugar Company Ltd. aims to procure larger quantities of maize from various regions across the country.

Government policy currently encourages ethanol production from maize, and the Central Government is in the process of establishing a National Coordinating Agency (NAFED) to procure maize from farmers and supply it to sugar factories for ethanol production. This initiative will benefit our factory and others by ensuring a sufficient supply of maize for continuous, year-round operations. READ MORE

Excerpt from Reuters: Ethanol demand lifts Indian corn prices to record high; Indian corn exports dip, imports seen rising to record 1 mln T; Poultry industry seeks duty-free imports, GM corn; Importers tap Myanmar, Ukraine for non-GM corn

A push by India to make more corn-based ethanol has turned Asia's top corn exporter into a net importer for the first time in decades, squeezing local poultry producers and scrambling global supply chains.

The jump in import demand comes after India in January hiked the procurement price of ethanol made from corn to drive a shift away from sugarcane-based ethanol for blending in gasoline.

With the government promoting ethanol in gasoline to reduce carbon emissions and trying to ensure ample supply of cheap sugar in the world's biggest market for the sweetener, India appears set to become a permanent net importer of corn.

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Traditional export markets such as Vietnam, Bangladesh, Nepal, and Malaysia, which bought corn from India because of its prompt availability, are now compelled to source supplies from South America and the United States. READ MORE

Excerpt from Financial Express: Sugarcane, corn, and rice are the primary raw materials used to produce ethanol all over the world. In India, the National Policy on Biofuels, 2018, with its amendment in 2022, currently includes an expansive list of items as raw material for ethanol production, including heavy molasses, biomass, sugar-containing materials such as sugar beets, and starch-containing materials such as corn. Despite expanding the list of permissible raw materials for ethanol production, finding an optimal mix has been challenging due to the complexities involved, leading to several policy formulation challenges.

In January, oil marketing companies raised the price of corn-based ethanol by Rs 5.70 to Rs 71.86 per litre to compensate for reduced sugar-based ethanol production after the government banned the use of sugarcane juice and syrup to maintain domestic sugar supplies amid last year’s drought. This policy shift increased corn demand, turning India from a net exporter to a net importer.

In 2023-24, India exported corn worth $444 million while importing $39 million, according to ministry of commerce and industry data. Corn exports are merely $46 million in the current year, while imports have already touched $103 million, far exceeding the previous years. Myanmar has become a significant corn exporter to India, totalling $64.73 million in the current year, up from $0.19 million in 2023-24. Corn imports from Ukraine have touched $36.05 million in the current year compared to $30.22 million last year. Overall, India currently has a $57 million trade deficit in corn compared to a $405 million trade surplus in the last year.

Over the past few months, as domestic corn prices have exceeded global rates, India’s poultry sector has struggled with rising feed costs according to industry associations, market research agencies, and key market players. Feed is the most considerable expense in poultry production, making up over 60% of input costs, with corn as the main ingredient comprising up to 65%. In response, industry groups are calling for importing 5 million tonnes of duty-free corn and approval of genetically modified corn for feed purposes, as current import duties are as high as 50%. Additionally, farmers are shifting from soya bean to corn cultivation due to higher returns, creating challenges for small poultry farmers who are now forced to reduce production and find alternative feed ingredients to manage costs.

Besides corn, rice also witnessed adverse conditions, with an added dilemmas over its competing usage for food and fuel. A report by Arcus Policy Research said that in 2022, about 1 million tonnes of Food Corporation of India (FCI) rice was sold to distillers at subsidised rates for ethanol production. In July 2023, the supply of broken and surplus rice for grain-based ethanol makers through the FCI was halted. This announcement came after the ban on the export of non-basmati white rice on July 20, 2023, to contain rising domestic prices. Last month, the government permitted the sale of up to 2.3 million tonnes of FCI rice stocks to grain-based ethanol distilleries between August and October under the open market sale scheme due to surplus rice stocks exceeding 54 million tonnes. Such supply shocks are exacerbated by constraints such as erratic rains and droughts associated with paddy cultivation in India and its continued fight against malnutrition among children.

In the face of climate change, energy security threatens India, as it is one of the fastest-growing economies in the world and simultaneously the most populous. India reached its E12 ethanol blending target in April 2023, aiming for E20 by 2025. However, it faces challenges in raw material procurement as current ethanol production from molasses and grains is insufficient to meet the E20 target. It’s crucial to ensure steady access to raw materials for ethanol production while considering other industries’ needs and the impact on food security.

To address these concerns, India is moving towards second-generation (2G) bioethanol, which uses agricultural waste as a sustainable feedstock, utilising 500 million tonnes of agricultural waste annually produced in the country. In March 2019, the government introduced the Pradhan Mantri JI-VAN to support advanced biofuel projects financially. Additionally, two second-generation refineries have been established in Panipat and Numaligarh to convert agricultural residues such as stubble and bamboo into ethanol.

Strategic land planning is also essential. India lost about 5 million hectares of arable land between 1978-79 and 2018-19, while fallow land increased by 4.3 million hectares, according to a report published by Arcus Policy Research. Without proper land planning, expanding fuel crops could reduce land available for food crops. Reviving fallow lands for fuel crops can enhance ethanol output without reducing the area under food crops. This approach can help balance the needs of ethanol production with other industries and maintain food security, ensuring a more predictable and sustainable supply of raw materials. READ MORE