While India is making a push for ethanol-blended petrol, by incentivizing sugarcane-derived ethanol, concerns remain about the water-guzzling nature of the sugarcane and fair remuneration for farmers.

On Nov. 2, the center, as part of its ethanol blending programme (EBP), approved a higher price for ethanol that is derived from different sugarcane-based raw materials. This was done for the ethanol supply year from December 1, 2022, to October 31, 2023, which coincides with the current sugar season. The Centre, in a press release, stated that the higher price of sugarcane-derived ethanol for oil marketing companies (OMC) is a bid to benefit distilleries and will “help in early payment to cane farmers.” The central government’s cabinet committee on economic affairs approved this higher price.

India is keen to reduce its dependence on imported crude oil, and ethanol-blended petrol is part of its strategy. In addition, ethanol, a biofuel, is a cleaner alternative to fossil fuels. Also, as it is derived from sugar and starch-rich agricultural byproducts, it helps provide an additional use of these products and boosts incomes for farmers. 

 

The National Biofuel Policy of 2018 (pdf) gives impetus to increase ethanol production from sugar molasses, sugarcane juice, sugar-containing materials (sugar beet, sweet sorghum) and starch-containing materials (corn, cassava, damaged food grains such as wheat, broken rice, rotten potatoes) that are unfit for human consumption. Currently, India has reached a 10% blending target, with 450 crore (4.5 billion) liters of ethanol already being produced. It aspires to reach a 20% target by 2025, for which it will need to produce 1,000 crore litres of ethanol.

In addition, India’s consumer affairs, food, and public distribution ministry has prioritized the availability of 275 lakh metric tonnes (LMT) of sugar for domestic consumption, over 50 LMT of sugar for diversion to ethanol production, and over 60 LMT for exports.

Earlier in September, in an interview with the Economic Times, Atul Chaturvedi, chairman of Shree Renuka Sugars, said that India is now a “sugar surplus” country, and “cyclicality is a thing of the past”. Shree Renuka Sugars is one of the largest sugar producers and refiners in the country. This means that the sugarcane crop has a growth cycle of 12-14 months, followed by five-six months of crushing in factories. However, with a focus on ethanol production, factories will be able to run the entire year.

A sugar factory owner based in Kagwad, Karnataka (lies on the border of Maharashtra and Karnataka), on condition of anonymity, told Mongabay-India that they currently make two lakh litres of ethanol in a day. “We intend to up this production to 30 lakh litres per day, for 300 days a year,” he said.

Sugarcane, a water-intensive crop

India is one of the largest producers of sugarcane in the world, with Maharashtra, Uttar Pradesh and Karnataka being the major sugar-producing states. There are over 700 sugar mills in the country, with a capacity to crush 340 lakh metric tonnes of sugar and an annual turnover of Rs80,000 crores. The sugar industry provides livelihoods for nearly five crore (50 million) people.

This year, Maharashtra, which has over 200 sugar mills, lent 14.87 lakh hectares of its land to sugarcane farming, Shekar Gaikwad, the state’s sugar commissioner, told Mongabay-India, adding that Maharashtra, by itself is the third largest producer of sugarcane in the world, after India and Brazil. “As a stand-alone state, it is way ahead of Thailand, Australia, and all the countries of the European Union.” Gaikwad also said that last year, India exported 110 lakh metric tonnes of sugar, of which, 70 lakh metric tonnes came from Maharashtra. This year, Maharashtra is slated to produce 138 lakh tonnes of sugar, of which 12 lakh tonnes will be diverted towards ethanol production, he said.

Sugarcane is also a water guzzler. According to a March 2020 report by Niti Aayog, one kilogram of sugar needs 1,500-2,000 litres of water. A large part of Maharashtra, however, falls under a drought-prone, rain shadow area.

The cash crop’s growth cycle lasts for 12-15 months, from the time the saplings are sown till the time the crop is harvested. Farmers in Maharashtra told Mongabay-India that, on average, one acre of land produces 60-80 tonnes of sugarcane and needs nine lakh litres of water twice a month. This monthly irrigation cycle depends on the region, the topography, the soil, and the availability of water and electricity. So, if the entire growth cycle of sugarcane is 12-15 months, then one acre of land would need nearly 216 lakh litres of water per annual growth cycle. In effect, a tonne of sugarcane could soak up 3 lakh litres of water in a growth cycle.

The harvested cane is taken to the factory, where it is crushed and separated into sugarcane juice, molasses, filter cake, and bagasse. Sugarcane juice is used to make sugar, bagasse is used in electricity generation and filter cake is used as a fertilizer. Molasses, a by-product of sugarcane, is usually used in ethanol production. Two types of molasses are used for ethanol production: molasses-C and molasses-B. Molasses-C is a final by-product from sugar processing with no economically extractable sugar remaining, and molasses-B is an intermediate by-product with some extractable sugar remaining.

Niti Aayog’s report (pdf) explains that a litre of ethanol produced from sugarcane consumes at least 2,860 litres of water in the process. A July 2020 research paper titled Water-food-energy challenges in India: political economy of the sugar industry published in Environmental Research Letters, states that India’s aspiration of 20% ethanol blending by 2025, if dependent on molasses, will require 1320 million tons of sugarcane, 19 million hectares of additional land and 348 billion cubic metres of additional water. With the increased production of sugarcane, there would be 161 million tonnes of extra sugar production. The paper, by researchers at Stanford University in the United States, recommends using only sugarcane juice for ethanol production (versus directly from molasses), which would not require additional water and land resources.

Farmers voice their issues, demands

Despite the water-guzzling nature of the crop, farmers prefer to grow sugarcane. One of the main reasons for it is that it is the only crop that offers a guaranteed Fair and Remunerative Price (FRP). FRP is a price set by the state government that sugar mills are mandated to pay the farmers for the cane obtained from them. The Sugar Control Order of 1966 regulates the payment of FRP across the nation. It also requires the mills to pay the farmers within 14 days of the cane’s delivery. Earlier in February, the Maharashtra government allowed sugar mills to pay farmers in two installments—the first installment within 14 days of delivery, and the second based on the final recovery of the product. However, the farmers are not happy with this latest decision.

In March 2022, Raju Shetti, president and founder of Swabhimani Shetkari Sanghatana, one of the largest farmer unions in the state, filed a writ petition at the Bombay High Court challenging the government resolution for staggered payments, calling it contradictory to sugarcane pricing policy. The petition is in progress in court.

Farmers say that their loans and other expenses have to be paid as per usual, so the payment in installments, based on unknown variables, does not benefit them. “We have to take loans from the banks to collect money to buy raw materials for the crop, sapling, and then tend to it for at least a year,” said Dattatarahi Kasorde, a sugarcane farmer in Kolhapur. “Then it is only after one year and a month of delivering the cane do we receive our money. It makes more sense to give us the money altogether, and not in installments. Else, we will always remain in debt.”

More recently, on Oct. 15, over 60,000 sugarcane farmers from across Maharashtra came together to call for a fixed price of sugarcane, and discuss the various issues they faced and demands they had. The farmers gathered for Swabhimani Shetkari Sangathana’s 21st Kisaan Sammelan (farmers’ get-together) in Jaysingpur, a village in Maharashtra’s Kolhapur district.

In November, when crushing began, a few parts of Maharashtra witnessed standoffs as farmers sought a higher price for their sugarcane produce—deflating tyres of tractor trolleys transporting harvest to the factory and protests in front of the sugar commissioner’s office.

Shetti told Mongabay-India that they also need the FRP to be higher this year. “Increase the rate of sugar or increase the rate of sugarcane. The cost price of raw material–fertilizers, diesel etc. has shot up. If the industry is doing as well as it claims to be doing, then why are the farmers not benefiting?”

“Normally, the mill owners do not pay on time, even though it is mandated under the sugar control order,” said sugar commissioner Gaikwad. “They are also required to pay a 15% interest if they fail to pay the farmers within 15 days. Nobody pays interest. There is a legal provision. They are even unable to pay basic FRP,” he continued. According to him, most sugar mills in the state are going under losses. “Most mills have negative balance sheets, negative net-worths. They are turning into NPA (non-performing assets),” he told Mongabay-India.

But he added that as compared to other states, Maharashtra is doing much better. “Yesterday a fortnightly report was sent where we stated that we gave around 99.8% FRP and only 65 crores are yet to be paid. U.P. is 500 crores in arrears, Gujarat is 1200 crores in arrears, Punjab is 800 crore arrears—in spite of huge production and turnover we could pay almost 100%,” he said when Mongabay-India interviewed him in mid-October.

Meanwhile, Shetti said that while the judiciary works on the side, protests are important to get noticed. “Nobody will hear us, pay any heed to our demands if we don’t bring ourselves on the road. We won’t give up till our demands are met,” he said.