The New E20 Petrol Dilemma: Will Your Food Plate Become More Expensive Because of Fuel?

The new ethanol policy for E20 petrol prohibits production from sugarcane to ensure the continued availability of sugar. However, the rising demand for maize could lead to higher prices for eggs and chicken.

In India, the new policy for procuring ethanol—required for E20 petrol—could impact agriculture, animal feed, and the prices of food items. This is because blending ethanol into petrol is not just a matter of vehicle mileage or fuel costs; it is also linked to agriculture and the prices of everyday commodities. In particular, the increased use of maize for ethanol production could drive up the cost of items like chicken and eggs.

For this reason, the government’s new ethanol procurement rules are being viewed as an attempt to strike a balance between energy requirements and food inflation. Let’s explore how this decision might affect your wallet and the food on your plate.

What is the government’s new ethanol policy?

Oil companies have invited bids to procure approximately 11 billion (1,100 crore) liters of ethanol for the 2026-27 supply year. However, the new tender excludes ethanol produced from sugarcane juice, syrup, and B-heavy molasses. The primary objective of this decision is to prevent the diversion of sugar toward ethanol production and to keep food inflation under control.

Why might producing ethanol from maize become costly?

With certain sugarcane-based ethanol options now restricted, there is a possibility that procurement costs for oil companies will rise. Consequently, these companies may have to rely more heavily on alternatives such as maize and C-heavy molasses to meet their ethanol requirements. According to the data, the procurement price for maize-based ethanol is ₹68.86 per litre, while the price for ethanol produced from 'B-heavy' molasses is ₹60.73 per litre. This means that maize-based ethanol is approximately 13.4% more expensive than ethanol derived from 'B-heavy' molasses, which could lead to higher costs for oil companies.

Could eggs and chicken become more expensive?

The increased use of maize for ethanol production could impact costs within the poultry industry, as maize is a crucial component of poultry feed. The poultry sector consumes about 55–60% of the domestic maize produced in the country.

Consequently, if a larger quantity of maize is diverted toward ethanol production, the cost of animal and poultry feed could rise. This is likely to affect the prices of eggs and chicken. However, the extent of any price increase will depend on maize availability and prevailing market conditions.