The West Indian Sugar Millers Association, the organisation of private sugar millers in Maharashtra, wrote to Sanjeev Chopra, Union food secretary, on Thursday asking the government to reconsider its order restricting the use of sugarcane juice or sugar syrup for producing ethanol.

The appeal comes despite oil marketing companies hiking the procurement price of ethanol manufactured from C-heavy molasses from Rs 49.41/litre to Rs 56.28. Sugar millers argue that their returns from ethanol produced from cane juice or sugar syrup are much higher than any other source.

Behind this push lies the straight economics that makes production of ethanol from sugarcane juice and syrup much more profitable than say B-heavy or C-heavy molasses. Thus, against the cost of production of Rs 57-58/litre, the oil marketing companies pay millers Rs 65.61.

Mills say the cost of production of ethanol from B-heavy molasses is around Rs 56-57, while that from C-heavy molasses is around Rs 55- 56. Ethanol from B-heavy molasses is priced at Rs 60.73 and that from C-heavy molasses post the hike is Rs 56.28.

“Thus the only return on investment in case of ethanol would be possible only if the fuel additive is produced directly from juice or syrup or B-heavy molasses,” said a miller from Ahmednagar district.

With apprehension about sugar production during the sugarcane crushing season of 2023-24, the central government capped the diversion of 17 lakh tonnes of sugar for the production of the fuel additive. Mills were urged to produce ethanol mainly from B-heavy molasses or C-heavy molasses, which entails that sugar as well as ethanol is produced.

The central government’s decision to push for producing sugar in preference to ethanol stemmed from the apprehension that two important states—Maharashtra and Karnataka—were supposed to have lower-than-expected production due to the drought and the paucity of cane.

However, both private and cooperative sugar millers have said the government’s apprehension is unfounded as the unseasonal rain in September-October and the proper winter conditions have seen per-hectare yield rise in cane and improved sugar recovery.

Bhairavnath B Thombare, president of the association, wrote in the letter that sugar production in Maharashtra would now stand at 95 lakh tonnes from the initial estimates of 88 lakh tonnes. “There would be an increase in Karnataka and other states as well,” he wrote.

The improvement in sugar production has made Thombare and others press for recension of the central government’s ban on ethanol production.

Sugar mills have invested heavily on ethanol production as the central government has pushed for ethanol blending. This has a dual purpose—to allow mills to get extra income and reduce the import of fuels. Around Rs 37,000 crores have been invested in terms of bank finances by mills for augmenting their ethanol production facility. Thombare said the present season which was supposed to last for barely 100 days would now extend upto 120-130 days.