Maize in focus as government pushes for cleaner ethanol-blended fuel

If the proposal goes through, the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) and the National Cooperative Consumers’ Federation Of India Ltd (NCCF) will procure maize from farmers at state-set guaranteed prices, Union food and public distribution secretary Sanjeev Chopra told Mint in an interview.

Currently, biofuels such as ethanol are made primarily from sugarcane and grains such as rice and maize. Nearly 25% of the country’s ethanol is made from cane juice, while another 50% comes from molasses, a byproduct of sugarcare refining. The rest comes from grains.

The government is targeting blending 20% ethanol with petrol by 2025-26, up from 12% now, in its push for less-polluting fuel.

The discussions come at a time when India’s sugar production is estimated to fall further due to patchy rainfall, hampering supply of molasses for ethanol-production. In the 2023-24 crop season, sugar production is expected to be 31.4 million tonnes against last season’s 32.7 mt after diversion towards ethanol. 

“All the states that grow maize will be covered. This will be a policy signal to ethanol plants that they should switch to maize rather than depending on sugar," Chopra said.

In the first phase, the government aims to procure 1.8 million tonnes of maize from farmers during 2024 and 2025 crop years. Indian farmers sow maize twice in a year, once during summer, or Kharif, season, and then again in the winter, or Rabi, months.

“We are discussing a proposal with the ministries concerned to allow the procurement of maize by Nafed and NCCF from farmers at MSP (minimum support price)," the food secretary said.

The government purchases farm commodities at a floor price set to stave off distress sales by farmers. The MSP for maize for 2023-24 is set at ₹2,090 a quintal. 

“Additional expenditure in terms of procurement, etc., will be subsidised by the government so that ethanol can be supplied to the distilleries for assured supply chain and assured price. This price will be used by (oil marketing companies) to fix prices for ethanol from maize that they will be taking from the distilleries," Chopra said.

Currently, the Food Corporation of India (FCI) procures some quantities of maize in select states such as Telangana and Andhra Pradesh.

The move to increase procurement of maize is also aimed at diversifying production of crops, especially in Punjab and Haryana that majorly produce paddy and wheat. 

“The idea is that Nafed and NCCF should step in and register farmers so that they get the assurance that they will be able to sell their produce at MSP," Chopra said. “This will also ensure crop diversification in states like Punjab, etc., where monocropping is going on."

India aims to increase maize production by 10 million tonnes over the next five years as demand for ethanol production grows. There’s also high demand from the poultry industry, which uses maize as feed, agriculture secretary Manoj Ahuja said earlier. 

Output of maize, the third-most grown cereal in India after rice and wheat, is estimated to be 34.6 million tonnes in 2022-23, up from 33.7 mt in the year prior. 

“Currently, IIMR (Indian Institute of Millets Research) is working on better varieties of maize. The current productivity of maize, which is 3-4 tonnes per hectare, can go up to 5-6 tonnes. As a result, farmers will get a better price or even higher than what they are getting for rice," Chopra said.