India’s ethanol push threatens edible oil self-sufficiency goals
Government data shows a 4% decline in oilseed acreage this season.
INDIA – India’s aggressive drive to ramp up ethanol production is inadvertently undermining its long-term goal of achieving self-sufficiency in edible oil.
As the government incentivises the use of corn and rice for biofuel, farmers are shifting away from oilseed crops like soybeans and groundnuts, raising concerns over rising import dependency.
The pivot is fueled by the surge in Distillers Dried Grains with Solubles (DDGS), a protein-rich byproduct of ethanol production, which has flooded the animal feed market.
DDGS is cheaper than traditional oilmeals, prompting feed manufacturers to substitute it, thereby depressing oilseed prices.
As a result, farmers are increasingly planting corn and rice, which offer better returns and additional fodder for livestock.
Government data shows a 4% decline in oilseed acreage this season, while corn cultivation has jumped 10.5%, reaching record highs.
In Nashik, Maharashtra, farmer Madhukar Londhe reduced his soybean acreage from six acres to just one, replacing the rest with corn.
“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,” said Mr. Londhe.
This shift poses a significant and serious challenge for India, which spent over US$17 billion on edible oil imports last year.
The country is the world’s largest buyer of vegetable oils, importing 16 million tons in 2023/24, up from 4.4 million tons two decades ago.
With domestic consumption growing at 3-4% annually, driven by demand for fried foods and sweets, the pressure to reduce import reliance is mounting.
New Delhi aims to boost domestic edible oil production to 25.45 million tons by 2030/31, up from 12.7 million tons currently.
However, industry experts warn that the ethanol-driven DDGS glut is jeopardising this target.
“DDGS is a pain in the neck,” said Aashish Acharya, VP at Patanjali Foods Ltd.
“Feed makers are substituting oilmeals with DDGS since it is cheaper. It’s disrupting the oilseed market and hurting processors.”
If current trends persist, India’s edible oil imports could exceed 20 million tons within the next six to seven years, potentially causing further strain on global supply and driving prices higher.
Sign up to HERE receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.
