From shortage to surplus: India pours record rice crop into ethanol

India is channeling an unprecedented amount of rice towards ethanol production to cope with its massive stockpile and to continue its ethanol blending initiative. The Food Corporation of India (FCI) has designated 5.2 million metric tonnes of rice for ethanol production in the marketing year 2024-25, which ends in June. This represents nearly 9% of global rice trade and marks a significant increase from fewer than 3,000 tonnes last year. This change follows a season of plentiful monsoon rains and an abundant harvest that raised rice reserves to 59.5 million tonnes as of June 1, 2025, which is over four times the government's buffer requirement. As sugarcane supplies were affected by last year’s drought, rice has become essential in helping India meet its 20% ethanol blending objective, which reached 19.8% last month. Industry analysts suggest that even greater volumes of rice could be used for ethanol production next year if governmental incentives are enhanced. Even though rice is priced at Rs. 22,500 (US$ 262.69) per tonne and ethanol is acquired at Rs. 58.5 (US$ 0.68) per litre, profit margins remain narrow. India's record yield of rice at 146.1 million tonnes significantly surpasses the domestic demand of 120.7 million tonnes, presenting challenges for managing surplus. Although exports are anticipated to increase by 25% to 22.5 million tonnes in 2025, the relief is somewhat limited due to India's current 40% share in global rice trade. Analysts predict that ethanol production will increasingly play a crucial role in balancing grain availability and supporting clean energy goals amidst changing agricultural trends.