BIOFUEL

About:

• Centre has hiked ethanol prices, with a special incentive for ethanol directly produced from 100% sugarcane juice, in a dual bid to reduce both surplus sugar production and fuel import bill.
  
  
• The ethanol produced from sugar is blended with petrol.
  
  

Background:

• Surplus sugar production has been depressing sugar prices. Record production of more than 31 million tonnes this year is far higher than domestic consumption rates of 25 million tonnes.
  
  
• As a result, sugar mills have struggled to pay their dues to cane farmers, and despite various government measures to improve liquidity, the arrears to farmers stand at more than Rs. 13,000 crore.
  
  
• Paying remunerative prices to ethanol suppliers will help in reduction of cane farmers’ arrears, in the process contributing to minimising the difficulty of sugarcane farmers.