The price of government rice and maize is not attractive for ethanol production
20-Sep-2024 02:26 PM
New Delhi. Recently, the Central Government has allowed its subordinate agency- Food Corporation of India (FCI) to sell rice from its stock to distilleries for ethanol production and has asked to limit its total quantity to 23 lakh tonnes.
Although this decision of the government has been generally welcomed by the biofuel manufacturers, it has also been said that the current price of the Food Corporation's rice is not attractive or profitable for the ethanol manufacturers.
The former Director General of ISMA says that the ethanol production industry was waiting for the Food Corporation's rice for a long time.
Now the government has also given permission to the corporation to sell 23 lakh tonnes of rice, but distillers are likely to show less interest in its purchase and its process also seems to be quite complicated.
The first thing is that distillers will have to participate in the e-auction which will be held every week. If this happens at the depot bar, then it will be necessary to see whether sufficient stock of rice is available at the depots near the distillers.
In the e-auction held on August 28, the Food Corporation fixed the reserve price of rice at around Rs 3150 per quintal.
The cost of bringing this rice from the Food Corporation's warehouses to the ethanol plant increases to Rs 3200 per quintal.
Considering the current price level of ethanol, this cost of rice has become non-profitable. The price of ethanol is Rs 58.50 per liter.
But the cost of ethanol produced from this rice comes to around Rs 72 per liter. In such a situation, either the Food Corporation will have to reduce the reserve price of rice or the government will have to increase the required price of ethanol purchase for oil marketing companies.
The domestic market price of maize has gone up considerably while the price of ethanol has not increased accordingly.
Last year, the minimum support price (MSP) of maize was fixed at Rs 2090 per quintal, which has been increased to Rs 2225 per quintal in the current year.
The best quality maize is produced in the northeastern part of Bihar where Purnia is its main wholesale market.
The price of maize there has jumped from Rs 2050-2100 per quintal last year to Rs 2600-2700 per quintal this time.