I believe there is no doubt that rice is a high water-consuming crop, which is why the government intends to shift to ethanol production via maize. This is evident from the increase in ethanol prices (the latest price rise) via the maize route. However, if we compare the price differences among the three routes—sugar-based, grain-based, and maize-based—the variation becomes clearer. Maize, however, is not only used as a feedstock for ethanol but also in animal feed, fish feed, and shrimp feed, which keeps its prices elevated. To address this, Oil Marketing Companies (OMCs) need to adjust prices accordingly.
It is also important to consider that the economics of ethanol blending with petrol should work in terms of cost savings in the final petrol price, while also helping to reduce crude oil imports. Additionally, broken rice from the Food Corporation of India (FCI) is a by-product that needs to be allocated somewhere. During the election phase, a mix of broken rice was distributed under the ‘Bharat Rice’ program to provide affordable food to those in need. The rice inventory is in plenty with FCI
Furthermore, many sugar-based ethanol producers have made significant capital expenditures that need to be factored in. However, grain-based routes typically have a dual feed advantage (utilizing both broken rice and maize). I might be wrong in my assessment, and I welcome any views on this topic.
Hence the recent decision of GOI is well thought to keep the prices of maize in check
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