Rice industry hit as ethanol production shifts to maize

Chandigarh: Unsold stocks of 100% broken rice are turning into a financial challenge for rice millers of Punjab, as the ethanol industry is shifting towards cheaper maize-based feedstock instead of rice. Although the Centre fixed the disposal price for 100% broken rice generated at a 15% ratio during the milling of improved quality common milled rice (CMR) at Rs 2,370 per quintal, ethanol units are currently procuring maize at nearly Rs 1,700 per quintal, making rice economically unviable.The ethanol industry is the largest consumer of 100% broken rice and its preference for the alternative option of using maize, thanks to a bumper crop, is turning into a challenge for the rice industry. Besides, 100% broken rice itself is being sold in the open market at around Rs 1,900-2,000 per quintal.
Ranjit Singh Jossan, vice-president of the Punjab Rice Industry Association, has demanded that the Centre should revise the price of 100% broken rice to Rs 1,900 per quintal and allow millers to purchase the stocks already lying on their premises through a simplified release order (RO) mechanism at the revised controlled rate. By giving millers the first option to clear their existing stock without procedural delays, the govt can eliminate unnecessary handling and transportation costs. Alternatively, ethanol and cattle feed industries may be directly mapped to specific mills. He also suggested that any ethanol plant or feed unit willing to procure broken rice under the Open Market Sale Scheme should be allotted mill-wise and centre-wise quantities to ensure structured distribution. Such a system would enable industries to lift 100% broken rice directly through open sale in case of delay or default, thereby ensuring smooth operations while easing the financial burden on millers. The millers have claimed that the bottleneck of unsold stock would make it difficult for mills to process new grains. Even though the Centre had announced Rs 1.23 per quintal per month as storage price for stocks of broken rice on their premises, the millers claim that the actual storage expenses are much higher. Bharat Bhushan Binta, president of the Punjab Rice Industry Association, added, "For the last two years, one key issue faced in the delivery of 10% improved rice is the liquidation of the remaining 15% broken rice, which has become a serious concern for the rice millers. Even during the previous season, millers encountered significant difficulties in disposing of the 15% broken component, and the situation continues this year as improved rice deliveries are ongoing for the past two months while the 15% broken stock keeps accumulating in mills. Despite repeated requests made by the millers on the online portal, there has been no response in terms of bidding, primarily because the open market rates of broken rice are currently very low. The demand for 100% broken rice has almost collapsed." Pilot project launched in 2025 The ‘10% improved quality CMR' (custom milled rice) Scheme was launched as a pilot project by the Union ministry of consumer affairs, food and public distribution in Feb 2025. Under traditional rules, the govt had accepted rice with up to 25% broken grains. This new scheme mandated that the rice be split into two separate lots – a high quality lot with 85% of the delivery of "improved quality" rice containing only 10% broken grains, and a broken rice lot of the remaining 15% that has to be separated as 100% broken rice.