FCI suspends production of ethanol from excess rice

The Food Corporation of India (FCI) has suspended supplies of excess rice to distilleries for ethanol production.

The move comes as India seeks to ensure adequate rice availability and reduce food prices for domestic consumers. It follows a ban on exports of non-basmati variety white rice the government introduced on 20 July, citing retail rice price rises of over 11% on the year and 3% on the month.

Common grade coarse grain rice spot prices averaged 26,750-35,020 rupees/t ($330-432/t) in June, according to the US Department of Agriculture.

Rice and other grains are becoming increasingly important feedstocks for ethanol production as India pursues higher gasoline blends, with a target of reaching 12pc blending during the December 2022-October 2023 ethanol supply year, up from 10pc reached in 2021-22. India also aims at 20pc ethanol blending in gasoline by 2025.

Ethanol produced from grains including excess and broken rice was expected to provide 1.51bn litres or around 26-30% of the total volume of fuel ethanol needed to meet the target this year, according to an industry source. Another 920mn l of grain-based ethanol needs to be supplied before the end of October 2023 to ensure the blending target is met, which will require another 2.1mn t of rice, the source added.

Use of rice feedstocks has grown significantly in India in recent years, supplementing traditional sugarcane feedstocks to help boost ethanol production. Damaged food grains were first permitted for use as a feedstock during the 2018-19 ethanol supply year, when just 90mn l of grain-based ethanol was produced. Surplus rice was allowed for use from October 2020, which pushed grain-based ethanol output up to 350mn l in 2020-2021.