The Centre has authorised the Food Corporation of India (FCI) to sell rice to distilleries for ethanol production, allowing for a maximum of 23 lakh metric tonnes (LMT) of rice to be lifted for this purpose. This announcement was made by the Department of Food and Public Distribution on Thursday.

In its official order, the Department stated, “The distilleries may be allowed to participate in e-auction and lift the rice during Aug-Oct 2024 as per the final auction rate of rice every week.” The order further specified that “the rice may be allowed for lifting subject to allocation of ethanol to the concerned distilleries by OMCs using FCI rice as feedstock.” It reiterated, “A maximum of 23 LMT rice may be allowed for lifting to ethanol distilleries.”

The decision to permit distilleries to participate in the auction of FCI rice was approved by the “Competent Authority,” according to the Food Ministry order. Under this decision, distilleries can purchase rice through FCI’s Open Market Sale Scheme (OMSS).

This move comes after the Centre had previously halted the supply of FCI rice to distilleries for ethanol production in July of the previous year. The Ethanol Supply Year is defined from December 1 of one calendar year to November 31 of the next. In March 2020, the Centre initially allowed FCI rice to be supplied to distilleries for ethanol production at a rate of Rs 2,250 per quintal under the Open Market Sale Scheme (Domestic). This rate was reduced to Rs 2,000 per quintal in December 2020 and has remained at this level since.

The price at which rice has been supplied for ethanol production has been significantly lower than the economic cost incurred by FCI for procurement and storage. The economic costs were Rs 3,939.26 per quintal in 2020-21, Rs 3,562.49 in 2021-22, Rs 3,858.19 in 2022-23 (revised estimates), and Rs 3,918.05 per quintal in 2023-24 (Budget Estimates).

From December 2020 until July 2023, FCI has supplied over 24 lakh MT of rice to distilleries for ethanol production. The Centre had also suspended the supply of FCI rice to state governments last year. However, earlier this month, Food Minister Pralhad Joshi announced that states would be allowed to directly purchase rice from the FCI under the Open Market Sale Scheme (Domestic) [OMSS (D)] without the need to participate in the e-auction starting from August 1, 2024. Under the OMSS (D), states can buy rice at Rs 2,800 per quintal, excluding transportation costs. Joshi also confirmed that the sale of atta and rice under the ‘Bharat’ brand will continue.

Published Date: August 30, 2024