Excessive Government Rice Reducing Maize Use in Ethanol Production

13-Nov-2025 03:19 PM

New Delhi. Although the use of maize in ethanol production in India has increased significantly in recent years, contributing to the rise and fall in prices of this important coarse grain, there are now signs of a decline in its use as ethanol manufacturers (distillers) are receiving large stocks of government rice at cheap or subsidized prices.

The President of the Grain Ethanol Manufacturers Association (GEMA) states that the increased use in ethanol production has encouraged the promotion of domestic maize production and provided farmers with better income.

Furthermore, the government has opened its rice reserves to ethanol manufacturers, reducing the dependence on maize for ethanol production and helping the government reduce its surplus rice stocks. 

Previously, the Food Corporation of India (FCI) suspended the supply of rice from its own stock to ethanol manufacturers for a few months, forcing the industry to increase its use of other grains, including maize. This led to a sharp increase in maize prices.

However, when adequate supplies of government rice resumed, maize consumption began to decline.

The president of GEPA states that although margins for ethanol produced from FCI rice are low due to high transportation and processing costs, the increased use of rice has curbed the rise in maize prices. 

Ethanol distilleries receive a fixed supply of Food Corporation rice, and the government has already allocated its quota, so distillers remain interested in purchasing it. On the other hand, they have to rely on the market for maize, where prices fluctuate.

Government rice is available at a fixed price. One problem is that producing ethanol from Food Corporation rice requires 60-65 days of working capital, compared to only 25 days for purchasing maize from the market.