India’s increased ethanol production uses corn and rice, flooding animal feed market with DDGS, lowering oilseed demand and prices.
Farmers shift from soybeans and groundnuts to corn, reducing oilseed acreage despite government efforts to boost oilseed cultivation.
Rising edible oil imports may increase costs, while ethanol success raises concerns about food security and self-sufficiency.
India's push to produce more ethanol is prompting farmers to shift away from growing oilseeds, undermining government efforts to reduce costly imports in the world's largest buyer of cooking oils, according to Reuters.
Due to record corn and rice harvests, India is using more of the grains to make ethanol and meet its target of blending 20% of the biofuel additive with gasoline. The process, however, produces Distillers Dried Grains with Solubles (DDGS), a protein-rich byproduct that is flooding the animal feed market.
The DDGS glut is reducing demand for oilmeals, lowering oilseed prices and prompting farmers in the country to plant more corn and rice in place of soybeans and groundnuts - despite India’s push to grow more of the oilseeds to ease imports.
DDGS production in India has increased about 13-fold over the past two years to an estimated 5.5 million tons by 2025, according to industry officials.
"DDGS is a pain in the neck," Aashish Acharya, Vice President at Patanjali Foods Ltd, a leading soybean processor told Reuters. "Feed makers are substituting oilmeals with DDGS since it is cheaper," he added.
Crop Patterns Changing Rapidly
Government sowing data revealed the shift, as per the Reuters report, as of August 8, oilseed acreage - including soybean and groundnut - was down 4% from last year, while corn area jumped 10.5% to a record high.
Madhukar Londhe, a farmer in Nashik in the western state of Maharashtra, told Reuters that he had cut his soybean area to one acre from six, planting the rest with corn - which has the added benefit of providing fodder from its stalks for his five milking cows.
About two dozen farmers in the area that Reuters spoke to said they had made a similar switch.
"Soybean prices were too low, so I couldn't even cover my costs in the past two years. Corn did better for me last year, so I've decided to grow more of it," Londhe said.
As reported by Reuters, India spent more than $17 billion on edible oil imports recently, and that expenditure may rise further due to reduced oilseed cultivation triggered by surging DDGS supply. The Hindu BusinessLine reported that during the oil year 2023–24, India spent approximately ₹1.31 lakh crore (about US $15.9 billion) on edible oil imports.
While India has met its 20% ethanol-blending goal, this success raises pressing concern that diverting food grains like rice and maize for fuel may undermine food security, strain public grain stocks and skew incentives favouring biofuel over essential edible oil self-sufficiency, reported Down To Earth.
