Assured MSP can help maize replace paddy and fuel India’s ethanol push: Ramesh Chand

India should continue expanding the use of maize for ethanol production, but the crop must replace water-intensive paddy cultivation in states such as Punjab and Haryana rather than displace oilseeds or other crops, Ramesh Chand, Distinguished Professor at the Indian Council for Research on International Economic Relations (ICRIER), said.He argued that assured procurement of maize at the minimum support price (MSP) would be the biggest catalyst for crop diversification, helping India meet its ethanol blending goals while reducing pressure on groundwater and improving farm sustainability. His comments come amid a debate over whether India’s ethanol programme is shifting agriculture from food to fuel.Chand said maize remains the best among the feedstocks currently being used for ethanol, provided production expands in the right regions. He suggested replacing a portion of rice cultivation in northwestern India, where paddy has contributed to groundwater depletion and environmental stress.”Among the three feedstocks, which we are trying right now, maize is the best choice if you consider all kinds of costs involved in the production of feedstock,” he said. He added that using maize in areas where rice is environmentally damaging makes economic sense, it makes environmental sense, it makes sustainability sense.Responding to concerns that increased maize-based ethanol production could hurt soybean growers by reducing demand for oil meals, Chand dismissed the argument. He said India continues to enjoy strong export demand for non-genetically modified oilcake and oil meals, particularly from Europe, making fears of a structural decline in demand unfounded.”India has a big window available for export of these kinds of things,” he said, adding that linking higher maize production to lower demand for soybean meal was stretching the imagination.Chand also rejected the view that maize cultivation would lead to higher edible oil imports. According to him, India’s dependence on imported edible oils is primarily a productivity issue rather than a consequence of ethanol policy.”Unless we increase the productivity of soybean, productivity of other oilseeds, India will not be able to improve its Aatmanirbharata in the case of oilseed,” he said. He noted that maize productivity has risen sharply over the past decade, while soybean yields have remained largely stagnant, making maize a more productive crop for farmers.Addressing concerns over maize imports, Chand said imports have increased because India has already built ethanol production capacity that requires additional feedstock. However, he argued that domestic production can meet future demand if maize cultivation expands in the right locations. He pointed to three opportunities: replacing rice in Punjab, Haryana and western Uttar Pradesh, expanding maize cultivation on rice fallows in Bihar, and leveraging improvements in maize productivity.Chand also acknowledged concerns around E20 petrol but clarified that his reservations relate to vehicle compatibility rather than agriculture. He said a large proportion of India’s existing two-wheelers and four-wheelers were manufactured before 2023 and may not be fully compatible with higher ethanol blends.On the policy front, Chand said the biggest obstacle preventing farmers from shifting from rice to maize is the absence of assured procurement. While paddy farmers receive MSP-backed procurement, maize growers often sell below the support price.”You just ensure MSP for maize the way you are ensuring MSP for rice. That first step itself will trigger the change there,” he said. Chand suggested extending procurement support for maize through a mechanism similar to the PM-AASHA scheme, arguing that reducing farmers’ price risk would encourage diversification.He added that support from both the Centre and state governments would be needed to make the transition successful and reduce the environmental cost of paddy cultivation in water-stressed regions.For the full interview, watch the accompanying videoCatch all the latest updates from the stock market here

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