India’s low sugar output may derail ethanol use

Refined sugar prices in India rose almost 70% in the crop year that began October 1, 2008 as output fell to 14.7 million metric tons. The output was low compared with the record of 28.5 million tons clocked in the 2006 to 2007 crop year. Production next year, government officials said, may be lower than an industry estimate of 20 million tons. The scenario would be unlikely to improve soon, analysts said, because the fall in output this year may deplete the country’s stocks, keeping refined sugar prices high and dashing attempts by the government and oil companies to curb consumption of regular gasoline by introducing ethanol blend fuels. In India, ethanol is produced from molasses, a by-product of crushing sugarcane. The country has a capacity to produce about 2,200 million liters a year of ethanol, according to the Indian Sugar Mills Association. (July 2, 2009)