India plans to reduce ethanol production in favor of sugar

The Indian government plans to limit the processing of sugar into ethanol to ensure that there is enough sugar on the domestic market, according to government and trade sources. This is due to the fact that sugar production is expected to decline due to insufficient rainfall in the main growing regions, Reuters reports.

The plants are supposed to produce ethanol only from molasses, a byproduct of sugar cane with almost no sugar content. New rules for ethanol purchases for the 2023/24 marketing year, which began on November 1, will be approved soon, and oil companies are likely to stick to contracts already in place.

The government’s decision comes as a blow to the industry, which has invested billions of dollars in expanding ethanol production capacity over the past five years.

Last month, the Indian Sugar Producers Association said that sugar production is likely to fall by 8% to 33.7 million tons in the 2023/24 marketing year, pushing prices on the local market to their highest level in almost 14 years.

Tags: prices, sugar, India, ethanol, food security, restrictions