Food Vs. Fuel India Introduction

• India’s increasing focus on ethanol blending to reduce fossil fuel dependence is reshaping its agricultural economy. 
• A nation that once had a surplus of maize and exported it is now importing the same crop to meet domestic ethanol demand. This shift is placing pressure on food and feed availability, disrupting supply chains, and triggering broader economic consequences—especially for allied sectors like poultry and soybean farming.

What Are Biofuels?

• According to the Food and Agriculture Organization (FAO), biofuels are energy carriers derived from biomass. Biomass refers to organic material that stores solar energy in chemical form. The following sources are commonly used for biofuel production:
  • Industrial wood and fibre residues
  • Food and non-food crops
  • Agricultural waste
  • Algae and household bio-waste
• These fuels offer renewable alternatives to fossil energy and play a significant role in reducing greenhouse gas emissions.

Ethanol: A Cleaner Fuel with Complex Consequences

• • Ethanol is the most prominent type of biofuel currently promoted in India’s energy transition. It is known for producing lower carbon dioxide emissions compared to fossil fuels. In India, ethanol is generated from:
    • Sugarcane juice and molasses
    • Rotten potatoes
    • Maize and rice
    • Agricultural and industrial waste

• Types of Ethanol Production:

• • First-Generation (1G) Ethanol: Produced directly from food crops like maize, rice, and sugarcane. While efficient in yield, it poses a direct challenge to food and fodder security.
  • Second-Generation (2G) Ethanol: Derived from non-edible sources such as crop stubble, industrial waste, and lignocellulosic biomass. This is environmentally sustainable but requires advanced technology and higher investment.

Why Is India Promoting Biofuel Production?

• Buffer Against Crude Oil Price Fluctuations: Global crude oil price fluctuations have a direct impact on India’s inflation and trade deficit. A strong domestic biofuel program can act as a financial cushion, reducing the negative effects of moderate oil price hikes on the Indian economy.

• Environmental Benefits and Emission Reduction: Biofuels are cleaner alternatives to conventional fuels. Ethanol blending, in particular, reduces emissions significantly. As per NITI Aayog, petrol blended with 20% ethanol can reduce carbon monoxide emissions by up to 50% in two-wheelers and 30% in four-wheelers. This contributes meaningfully to improving air quality in urban areas.

• Boosting the Agricultural Economy: Biofuel production opens up new markets for farmers, especially for crops like sugarcane, maize, and surplus food grains. It encourages better price realization, promotes crop diversification, and supports allied sectors. These benefits are aligned with the government’s vision of doubling farmers’ income.

• Rural Employment Generation: The biofuel sector is labor-intensive, especially in feedstock collection, processing, and distribution. According to estimates by the Asian Development Bank, India’s biofuel expansion can generate up to 18 million jobs in rural areas. This supports inclusive growth and reduces migration to urban centers.

• Enhancing Energy Security: India is diversifying its energy sources to reduce its dependence on fossil fuels. A diverse energy mix ensures a more secure and self-reliant energy infrastructure. Biofuels, being renewable and domestically producible, play a crucial role in enhancing energy security.

• Import Substitution and Foreign Exchange Savings: India currently imports around 80% of its crude oil requirement. This reliance puts the economy at risk from volatile international oil prices. Biofuels can act as a substitute for a portion of this import burden. According to NITI Aayog, reaching the E20 ethanol blending target could save India approximately $4 billion annually in import costs.

Can India’s Biofuel Policies Threaten Its Food Security?

• India’s ambitious biofuel roadmap, particularly ethanol blending targets, aims to strengthen energy independence and reduce fossil fuel imports. 
• However, as emphasized by the Food and Agriculture Organization (FAO), large-scale diversion of crops for biofuel and climate variability are among the biggest long-term threats to global food security. India, despite its sustainability intentions, is not immune to these trade-offs.
• Conversion of Food Grains into Fuel: A significant portion of India’s ethanol is still produced via first-generation (1G) technology, which relies on food crops like rice, maize, and sugarcane. Since second-generation (2G) ethanol—produced from waste or non-edible biomass—remains commercially non-viable, the demand for 1G feedstocks continues.
  • Example: In 2022, India diverted around 1 million metric tonnes of edible rice from the Food Corporation of India’s (FCI) stock—originally meant for human consumption—to ethanol production at subsidized rates. This undermines food and nutrition security, especially for vulnerable populations.
• Agricultural Land Use Shift: The increasing profitability of biofuel crops like sugarcane and corn may lead farmers to repurpose land meant for food crops to grow energy crops. This reduces the area under essential food production, risking domestic availability and food self-sufficiency.
• Pressure on Small and Marginal Farmers: Biofuel-focused policies can strain rural resources. As demand for water, fertilizers, and irrigation increases due to intensive biofuel crop cultivation, input prices may rise, making agriculture less affordable for small and marginal farmers. These farmers may not have the capital to compete or adapt, leading to exclusion from the evolving agro-economy.
• Surge in Food Prices: Reduced production of essential food crops caused by land-use change can contribute to lower supply and rising prices in local markets. In 2023–24, the Indian government capped the use of sugarcane juice and sugar syrup for ethanol production precisely to counter the surge in domestic sugar prices.
• Weakening of Crop Diversification: Price incentives for sugarcane and paddy—key ethanol crops—may discourage farmers from growing pulses, millets, and oilseeds, which are vital for nutrition and soil health. This undermines national strategies promoting diversified and sustainable agriculture.
• Soil Health Degradation: Monocropping of high-demand feedstocks like sugarcane and rice, often practiced to maximize profits under ethanol incentives, results in nutrient depletion in soil. Over time, this compromises soil fertility and increases dependence on chemical fertilizers.
• Unsustainable Water Consumption: Sugarcane and rice are extremely water-intensive crops. Producing just 1 kg of sugar requires an estimated 1,500 to 2,000 litres of water. Increased cultivation of these crops for ethanol may strain India’s already over-exploited groundwater resources and reduce water availability for other essential crops and household consumption.
• Climate Change Vulnerability: Encouraging monocultures for biofuel feedstocks can reduce agro-biodiversity, making crops more vulnerable to pests, diseases, and extreme climate events. This lack of genetic diversity undermines long-term resilience in the face of growing climate uncertainty.

Can India’s Fuel Policy Support Food Security in the Long Term?

• • Promoting Nutritional Security through Rural Development: Biofuel investments promote employment, infrastructure, and economic activity in rural areas. As livelihoods improve, household access to food and healthcare strengthens. This indirectly supports better nutrient absorption and dietary diversity, thereby contributing to nutritional security—especially in underdeveloped regions.
  • Boosting Agricultural Productivity through Technological Advancements: Increased focus on biofuels can drive research and innovation in agricultural practices. With better seeds, inputs, and cultivation techniques stemming from biofuel-related R&D, farm productivity can rise. This benefits both food and non-food crop yields, helping farmers grow more efficiently.

• Enhancing Agricultural Income through Crop Diversification: Biofuel production opens new market opportunities for farmers. For example, biodiesel derived from oilseeds can generate additional income for growers. When oilseed crops such as mustard or groundnut are rotated with staple crops like wheat, farmers benefit economically without sacrificing food output. This approach supports both energy generation and food cultivation.

• Catalyzing Private Sector Investment in Agriculture: Supportive biofuel policies can attract private investment into agriculture, particularly for biofuel feedstock cultivation, warehousing, and logistics. This can improve agricultural infrastructure, offer better market access, and raise the value chain efficiency for both food and energy crops.

Way Forward

• Secure Vulnerable Populations with Social Safety Nets: To prevent biofuel-linked inflation from affecting poor households, strong welfare programs like the National Food Security Act should continue. These measures guarantee access to affordable food, even when market conditions fluctuate.
• Focus on Sustainable Ethanol Sources: Sources like molasses-based ethanol, when cultivated on marginal or wastelands, can ensure energy production without competing with arable land. This also enables efficient water use, preserving agricultural resources.
• Rational Land Use Planning: India must undertake land-use mapping and allocation studies to clearly identify suitable zones for biodiesel cultivation. Policies should promote biofuel feedstock growth on degraded or unutilized lands, ensuring core food-producing areas are not disturbed.
• Strengthen R&D in Advanced Biofuels (2G to 4G): India must prioritize second-generation (2G) and emerging third- and fourth-generation biofuels to reduce dependence on food crops.
  • 2G biofuels use non-edible crop residues, molasses, and waste biomass
  • 3G uses algae
  • 4G explores genetically engineered organisms
    Investing in these technologies will decouple fuel production from food supply chains.
• Broaden the Clean Energy Horizon: To reduce overdependence on land-based biofuels, India should accelerate complementary clean energy initiatives such as:
  • Electric vehicles (EVs)
  • Solar and wind energy
  • Green hydrogen
• Align Incentives with Sustainable Objectives:  Subsidies and tax relief provided to the biofuel sector should be targeted and conditional. For instance, financial incentives should exclude expansion onto prime farmland and instead support innovations in degraded land productivity and waste biomass processing.