FCI Rice Driving Government's Ethanol Push: Record Supplies
UPSC / SSC current affairs note · Economy
Why in news
FCI rice supplied for ethanol production surged to a record 4.4 million tonnes in the current Ethanol Supply Year (ESY) 2025-26 (up to June 30), up from 3.2 million tonnes in ESY 2024-25. This follows a new government mandate requiring grain-based distilleries to source at least 40% of their ethanol offer from surplus FCI rice. The shift marks a reversal from 2023 when supplies were suspended due to food security concerns.
Background
In 2023, the Centre suspended FCI rice sales for ethanol after poor monsoon due to El Nino hit rice production, raising food security concerns. Supplies resumed in ESY 2024-25 after rice stocks recovered and procurement improved. The government now mandates a minimum 40% sourcing from FCI rice for grain-based ethanol bids to OMCs.
Key facts
FCI rice supplied for ethanol: 4.4 million tonnes in ESY 2025-26 (up to June 30), vs 3.2 million tonnes in ESY 2024-25.
New condition: grain-based distilleries must source at least 40% of their ethanol offer from surplus FCI rice during first three quarters of ESY, extended to fourth quarter via July 3 circular.
Maize use for ethanol: 6.8 million tonnes in current ESY, down from 13.1 million tonnes last year.
Use of damaged foodgrains and broken rice fell to 99,000 tonnes from 1.79 million tonnes a year earlier.
Government maintains no impact on food security; procurement data supports this.
Supplies had been suspended in 2023 due to El Nino-induced poor monsoon and food security concerns.
Ethanol Supply Year runs from November to October.
FCI rice use increase is driven by the new tender condition and comfortable government stocks.
Prelims pointers
- FCI: Food Corporation of India, nodal agency for food grain procurement and distribution.
- Ethanol Supply Year (ESY): November to October.
- OMCs: Oil Marketing Companies (e.g., IOC, BPCL, HPCL).
- El Nino: climate pattern affecting monsoon, linked to 2023 rice production shortfall.
- Grain-based ethanol: ethanol produced from grains like rice, maize, etc.
- Surplus FCI rice: rice from FCI stocks beyond buffer and PSH requirements.
- Broken rice: rice kernels broken during milling, used for ethanol or animal feed.
Mains angles
- GS3: Government policies for ethanol blending – impact on food security vs energy security.
- GS3: Agriculture – diversion of foodgrains for non-food uses, implications for PDS and inflation.
- GS2: Role of FCI in food security and its evolving mandate.
- GS3: Environment – ethanol as renewable energy, trade-offs with food production.