India's drive to produce more ethanol is causing farmers to abandon oilseed crops, undermining the government's efforts of the world's biggest cooking oil buyer to reduce costly imports.
Thanks to record maize and rice harvests, New Delhi is using more grain to produce ethanol and achieving its goal of blending 20% biofuel with gasoline. However, the result is dry distillers grains with solubles (DDGS) — a protein-rich byproduct that floods the animal feed market.
The surplus of DDGS weakens demand for meal, lowers oilseed prices, and encourages farmers in this South Asian country to grow more maize and rice instead of soybeans and peanuts, despite New Delhi's desire to grow more oilseeds to reduce imports.
According to industry representatives, over the past two years, DDGS production in India has increased by approximately 13 times and is estimated to reach 5.5 million tons by 2025.