The Grain Ethanol Manufacturers Association (GEMA) has formally requested the Central Government to adjust the selling price of ethanol produced from rice, following a recent change in the price of rice provided by the Food Corporation of India (FCI).

Previously, the rice was being sold to ethanol manufacturers at Rs 20 per kg, with the price of ethanol set at Rs 58.50 per liter.

However, the price of rice has now increased to Rs 28 per kg, which has led GEMA to call for a corresponding increase in the price of ethanol to Rs 70.71 per liter.

The price hike for rice, which was formally set at Rs 2800 per quintal (with no additional transportation costs) by the Union Food Ministry on January 7, 2025, has created a situation where ethanol manufacturers face higher production costs.

This is because ethanol prices are typically linked to the cost of raw materials like rice, maize, and sugarcane. In August 2024, a temporary arrangement allowed distilleries to purchase rice from FCI at auction prices, but the policy for the current marketing season (November-October 2024-25) had been undecided until January 7, 2025.

Given these changes, GEMA has now urged the Petroleum Ministry to adjust the price of ethanol to reflect the increased cost of rice.

This call comes at a time when the government has not yet revised the ethanol prices for any raw material like rice, maize, or sugarcane for the new marketing season.

The association's request highlights the need for government policies to adapt to shifts in market conditions, ensuring that ethanol producers can maintain profitability while the government continues to manage its rice distribution policies effectively.