The government will begin buying maize from farmers at a guaranteed price for distillers.

The standard operating procedure (SoP) for the government’s plan has been released. According to it, cooperatives like NAFED and NCCF would contract with distillers to guarantee a supply of maize at ₹2,291 per quintal for the production of ethanol.

A Chhindwara, Madhya Pradesh, distiller and NAFED are expected to sign the first agreement under the scheme, which aims to guarantee maize farmers a minimum support price (MSP) and distilleries a continuous supply of feedstock, thereby reducing price volatility for both parties.

The action is a component of the government’s larger attempt to boost gasoline-ethanol blends, which reached 12% in the Ethanol Supply Year (ESY) 2022–2023 and are targeted to reach 15% in the ESY 2023–2024. According to information obtained, as of January 31, the blending rate for the current ethanol year, which started in November 2023, was approximately 12%.

Under the SoP, NAFED and NCCF will enter into a supply contract with distillers for supply of maize with price, quantity, location of supply and other commercial terms and conditions pre-defined for the ESY.

  • For ESY 2023–2024, the distiller will pay ₹2,291 per quintal for maize, which includes all procurement prices and agency profits. The current maize MSP, which will be changed later, is ₹2,090 per quintal and will take effect in October 2024.
  • The distiller will pay the transportation cost of maize from the mandi to the distiller’s warehouse. If the sale is through the ONDC platform, then the buyer will bear the buyer margins of ONDC.
  • To achieve the target of 20 per cent ethanol blending with petrol under the EBP programme by 2025, the focus is on maize, a hardy crop that can withstand drought.
  • With production of sugarcane expected to be impacted, the government is focusing more on increasing the use of maize as a feedstock for producing ethanol. To achieve this, the production of the commodity needs to be increased.

Source: TheBusinessline