- Bihar aims to increase its maize-based ethanol production after the central government approved 47 ethanol plants in the state, of which at least 32 are grain-based.
- With the increase in demand for ethanol, to reduce fossil-fuel dependency, the price of maize has increased in the state.
- Farmers and ethanol manufacturers in Bihar report that the price rise and subsidies from the government to enable ease-of-business, have been beneficial.
Years after Bihar banned alcohol, its active ingredient, ethanol, is finding a fresh use. The central government has approved 47 ethanol plants in the state, of which at least 32 are grain-based.
Ethanol can be extracted from plants such as sugarcane or maize after they are fermented and processed. The ethanol thus derived is mixed with petrol or diesel to make blended fuels for vehicles. This blended fuel is considered to have a lower environmental impact. Also, more domestic biofuel would mean fewer fossil fuel imports and greenhouse gas emissions.
In 2018, India had set a target of blending 20% ethanol in petrol by 2030, under the Ethanol Blended Petrol Programme. By that period, it aims to replace approximately 1,016 crore litres of petrol with ethanol. Producing this vast quantity of ethanol would require around 165 lakh metric tonnes of food grains. It also achieved the goal of blending 10% ethanol in petrol nationwide in June 2022, five months earlier than the set target.
Bihar’s food-to-fuel industry
Bihar was the first state in India to introduce an Ethanol Production and Promotion policy in 2021, which encouraged new ethanol factories to start operations in Bihar. The policy also aims to increase farmers’ earnings, generate local jobs, and attract investors. Sanjay Kumar Agarwal, secretary of the department of agriculture in Bihar, reveals that the maize production has doubled in the state in the last three years, which further encouraged more ethanol plants.
“If you look at Bihar, we are agri-surplus. Rice, wheat and maize are grown in huge quantities. We also have a lot of ground water…Seeing this potential, the government introduced the Ethanol Policy 2021. The response was very good. Bihar has the most ethanol plants at present, in India,” shares Kunal Kishore, Founder and Director, InvestAid India.
The Additional Chief Secretary, Department of Industries, Bihar, Sri Sandeep Poundrik confirmed that there are 15 ethanol plants which have started work in Bihar, of which nine have already commenced production, and six plants are under construction.
Over 60% of ethanol is produced from sugarcane molasses in India. But with maize being a substantial part of Bihar’s farming produce, the state aims to increase its grain-based ethanol production.
Read more: India aims to go big on sugarcane-based ethanol, but water intensity of the crop throws up concerns
Maize price goes up with demand
The increased demand for maize to produce ethanol, has created fresh opportunities for maize farmers, and the price of maize has gone up as well. “Currently, the price of maize is between 2,300 and 2,400 rupees per quintal. Three to four years ago, the price was around 1,600 to 1,700 rupees per quintal,” says farmer Dheeraj Kumar from Bisanpur, Purnea.
Along with the farmers, the ethanol factories have benefited with the rise in price for maize too. Dilip Patel, the promoter of an ethanol plant Patel Agro Industries Pvt. Ltd. shares, “This (the price rise) has directly benefited the farmers. The Bihar government has offered us (ethanol plants) more subsidies compared to other states. First, the government will provide up to 10% of the bank’s interest as a subsidy. Second, there is also a significant GST exemption. They also provided a lot of incentives for things such as investment in workers. Any industry requires various clearances to be set up, which the Bihar government quickly provided.”
However, the rising maize price could also be a cause of concern for Bihar and other states. Ramya Natrajan, a researcher at CSTEP who specialises in alternative fuels notes, “Studies in other countries like the U.S. have shown that this increases the prices of food; there is a lot of inflationary effect of this. We might be seeing that in India. If the demand for ethanol increases, the demand for maize as a food grain, will increase. People will want to cultivate more and more of it, but then it will increase its price.”
This story was produced with the support of Internews’ Earth Journalism Network.
Banner image: The central government approved 47 ethanol plants in the state, of which at least 32 are grain-based. Photo by Pranav Kumar.