Ethanol Push: Govt Taps FCI Buffer Stock Rice to Meet 20% Blending Target

In a significant policy move, the Government of India has approved the allocation of additional rice from the Food Corporation of India (FCI) buffer stock for ethanol production. This decision is part of the broader strategy to boost India’s ethanol blending program under the Ethanol Blended Petrol (EBP) initiative, aimed at reducing dependency on imported fossil fuels, cutting emissions, and enhancing the income of farmers. However, the move has sparked a wave of debate across stakeholders — from environmentalists to economists — raising concerns over food security and resource prioritization.

What’s the Government’s Ethanol Policy?

India's Ethanol Blending Program is a national policy initiative that aims to blend ethanol with petrol to lower carbon emissions and reduce crude oil imports. The target is to achieve 20% ethanol blending by 2025, a significant leap from the current 11.5% average.

Traditionally, ethanol in India is produced from sugarcane molasses and damaged food grains. However, the recent decision introduces FCI rice — originally meant for the Public Distribution System (PDS)—as a feedstock for ethanol production.

Key Highlights of the Decision

• Additional Allocation Approved: The Union Government has sanctioned a fresh quota of rice from FCI buffer stock to be used by distilleries for ethanol production.

• Price Set by Government: The rice will be provided at a predetermined price, typically lower than open market rates, ensuring affordability for ethanol producers.

• Blending Target Acceleration: This allocation supports oil marketing companies in meeting the 20% blending target by 2025.

Why Rice from FCI?

The Food Corporation of India maintains strategic buffer stocks of food grains — mainly rice and wheat — to ensure food security, especially during natural calamities, inflationary pressures, or national emergencies.

Due to record harvests and falling offtake from the PDS in certain states, FCI has accumulated excess rice stock. The government argues that utilizing a portion of this surplus for ethanol production is a pragmatic approach that avoids waste, generates value, and propels the green energy transition.

Potential Benefits

Boost to Ethanol Economy

With ethanol procurement rising significantly, the use of rice as an alternative feedstock:

• Enhances ethanol output capacity.

• Reduces strain on sugarcane-based ethanol, which is water-intensive.

• Helps meet the growing demand from oil marketing companies.

Support to Farmers

• Ethanol production provides alternative market avenues for farmers growing rice. Additionally, millers and rice processors benefit from the government’s assured offtake.

Energy Independence

• India imports over 85% of its crude oil needs. Ethanol blending helps save foreign exchange, improve fuel efficiency, and reduce carbon emissions.

Waste Utilization

• Excess or decaying buffer stock often results in wastage and storage costs. Channeling this into fuel production is an economically sensible alternative.

Concerns and Criticisms

Food Security Risk

• Critics argue that using edible rice for fuel, especially in a country with malnutrition and food insecurity, is ethically and socially questionable. What if a sudden food crisis arises?

Environmental Cost

• Rice is a water-intensive crop. Encouraging ethanol from rice may increase unsustainable farming practices in already water-stressed regions.

Policy Clarity and Transparency

• Civil society groups have asked for clearer transparency in procurement and allocation, fearing that private distilleries may gain undue advantage from subsidized government rice.

Alternative Feedstocks Ignored

• Experts recommend that the government should prioritize non-food biomass, such as agricultural waste, to avoid compromising food supplies.

Government’s Response

In defense, government officials maintain that

• Only “excess” buffer stocks are used, not compromising PDS obligations.

• The move is aligned with India’s climate goals and farm income strategies.

• Long-term sustainability is being addressed through a balanced ethanol feedstock mix, including 2G (second-generation) ethanol from agricultural residues.

The allocation of additional rice from FCI for ethanol production is a strategic step forward in India’s green energy mission, but it walks a thin line between innovation and controversy. While it offers potential economic and environmental dividends, the ethical and ecological considerations call for careful calibration, constant monitoring, and policy agility.

India’s success in navigating this path will depend on transparency, diversification of feedstocks, protection of food security, and a robust public dialogue. The government’s intent is clear — to foster self-reliance and sustainability — but the execution and impacts will ultimately determine whether this policy decision becomes a bold success or a cautionary tale.

FAQ's

Why is the Indian government using FCI rice for ethanol production?

• The government is using surplus rice from the Food Corporation of India’s buffer stock to produce ethanol under its Ethanol Blended Petrol (EBP) program. This supports India's goal of achieving 20% ethanol blending by 2025, reduces fuel imports, and promotes green energy.

Will this move affect food security in India?

• According to the government, only excess buffer stock not required for the Public Distribution System (PDS) is being used. However, critics argue that using edible rice for fuel could pose long-term risks if food demand suddenly rises.

What is the benefit of using rice instead of sugarcane for ethanol?

• Rice offers an alternative to sugarcane, which is water-intensive and regionally concentrated. Utilizing rice can diversify ethanol sources, reduce environmental stress in certain areas, and ensure a steady supply when sugarcane output fluctuates.

How much rice has been allocated for ethanol production?

• The specific quantity varies by government notification and market demand, but the recent approval involves allocating additional volumes beyond previous levels from the FCI’s stockpile for the ethanol supply year.

Who can buy FCI rice for ethanol production?

• Only licensed ethanol producers or distilleries approved by the government are eligible to purchase rice at a fixed price from FCI for ethanol purposes. The transactions are monitored to ensure compliance with energy policy objectives.

What is the price of FCI rice for ethanol production?

• The government sets a fixed procurement price, usually lower than open market rates, to make ethanol production economically viable. As of recent guidelines, the price has been ₹2,000 per quintal, but it may be revised over time.

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