Government Confirms Food Corporation Sold Rice to Ethanol Plants Below Acquisition Cost

The Union government revealed in Parliament on Tuesday that the Food Corporation of India (FCI) sold rice to ethanol distilleries at significantly reduced prices, raising concerns about the impacts on food security and pricing strategies. Between June 2025 and June 2026, the FCI sold rice at prices ranging from Rs 2,250 to Rs 2,320 per quintal, which is approximately 40% lower than its average acquisition cost of Rs 3,720 per quintal for the fiscal year 2024-2025 and Rs 3,889 per quintal for 2025-2026, according to the Ministry of Food and Public Distribution.

This price discrepancy has sparked debate about the economic implications of such sales, particularly in a country where food inflation and security are critical issues. The government further stated that for the period from November 2026 to June 2027, the price for rice sold to ethanol producers will be set at Rs 2,390 per quintal.

During the past twelve months, the FCI has supplied a substantial 6.3 million tonnes of rice to ethanol producers, amounting to an impressive Rs 14,596 crore in total value. The allocation has been uneven across states, with Haryana receiving the largest quantity at over 844,000 tonnes, followed closely by Uttar Pradesh with 838,645 tonnes. Other significant recipients included Punjab and Himachal Pradesh (combined total of 658,952 tonnes), West Bengal (584,672 tonnes), and Madhya Pradesh (432,485 tonnes).

Despite these transactions, the government clarified that no subsidies were provided to ethanol manufacturers for their rice procurement. This stance is being scrutinized amid concerns over potential diversion of food grains, which could jeopardize the availability of essential food items for the population.

The Ministry also reported that two instances of rice designated for ethanol production being redirected for other uses were identified, prompting the government to take appropriate measures. This revelation has raised alarms about regulatory oversight within the FCI and the potential ramifications for India’s agricultural policies.

Source: scroll.in