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FCI cuts off rice supply, ethanol makers in a crisis

25 July 2023

NEW DELHI: Nearly 100 distilleries producing ethanol are staring at a serious crisis as the Food Corporation of India (FCI) has stopped supplying rice to them for more than a week. The government is reviewing its policy of supplying surplus rice from the FCI for manufacturing of ethanol and may put some restrictions, sources said.

The government move comes close on the heels of the ban on exports of non-basmati white rice, which came to immediate effect last week. The government had said the ban was aimed at containing inflation and to ensure adequate availability in the domestic market.

Till now the government was offering non-fortified rice from the “Central Pool” stock held with the FCI for ethanol production at the rate of Rs 2,000 per quintal. Sources said against the target of selling 34 lakh tonnes of rice to distilleries during the current ethanol year (2022-23), so far the FCI has supplied around 14 lakh tonnes.

“The FCI has not provided us rice for over a week. We are facing a huge crisis and many are on the verge of stopping ethanol production. We have taken up the issue with the FCI and will approach the food ministry,” said V N Raina, secretary general of All India Distillers’ Association.

Industry sources said earlier there were talks of getting parboiled rice from the FCI for distilleries, but now that has been ruled out. They claimed the sudden discontinuation of rice supply to distilleries has the potential to delay the government’s target to achieve 14% ethanol blending in petrol by November this year. In 2021-22, the FCI had sold around 10 lakh tonnes of rice for the production of ethanol.

The average price of rice has touched Rs 41 a kg compared to Rs 40 a month ago.

Source: The Times of India