According to persons acquainted with the situation, the amount of federally held rice stockpiles purchased by ethanol-making distilleries increased rapidly this year (approximately 920%) as supplies of broken or damaged grains of the staple declined, one of the factors that caused India to restrict export.
As a worldwide food crisis took hold and wheat became scarce owing to the Ukraine war, broken rice exports skyrocketed.
According to persons acquainted with the situation, the amount of federally held rice stockpiles purchased by ethanol-making distilleries increased rapidly this year (approximately 920%) as supplies of broken or damaged grains of the staple declined, one of the factors that caused India to restrict export.
On June 5, 2021, PM Modi announced a five-year delay in the target year for 20% ethanol blending to 2025, a high-priority national goal. The blending initiative attempts to reduce India’s reliance on expensive oil imports.
Broken or partially damaged rice is leftovers from milled paddy. It is an important source of poultry feed as well as a raw ingredient for the production of ethanol.
According to official forecasts, the country will require 11 billion litres of ethanol to reach the 20% blending requirement. Because molasses, a by-product of sugar, cannot meet that aim alone, the nation allowed the use of cereals to produce ethanol, which is combined with gasoline, in 2018-19.
The government authorised the Food Corporation of India (FCI), the government’s principal food stockpiler, to sell certain quantities to grain-based ethanol factories in 2020-21.
In the so-called ethanol supply year 2021-22, FCI allotted 1.3 million tonne of rice for the purpose. According to food ministry data, distilleries hoisted 505,935 tonne up through August 28, 2022, up from 49,000 tonne the previous year.
As a worldwide food crisis took hold and wheat became scarce owing to the Ukraine war, broken rice exports skyrocketed, driving up costs. “Countries in need of food began importing broken rice from India,” said Anshul Singh, owner of the food trade business Santoshi Impex.
The export of broken rice was 2.1 million tonne from April to August 2022, up from 1.5 million tonne in the same period the previous year. According to the statistics, this marks a 4178% increase over the base period of April-August 2019.
According to the food ministry’s data, importers of broken rice included Djibouti, a country in the Horn of Africa, Indonesia, Senegal, and even China.
“FCI rice was cheaper than broken rice, which is why distilleries acquired more of it this year,” said Abinash Verma, proprietor of Eastern Indian Biofuels Private Ltd, a distiller.
Distilleries paid roughly $20 per kg for FCI rice, while broken rice, however unfit for human consumption, was selling for $21-22. Rice procurement, transportation, and storage costs the FCI around $41 per kilogramme.
Higher broken rice costs also put a strain on poultry producers, who switched to other grains like maize. Maize prices have risen from around 19 per kg in January to over 24 per kg this month.
According to Verma, India is unlikely to face a rice scarcity. The government’s export restrictions, including a 20% export levy, are more of a preventive measure, he added, since traders began hiking prices in expectation of a lesser harvest owing to a spotty monsoon this year.