India may see lower maize prices if US imports are eased, farmers may be hit
US maize imports could reshape India’s maize market. Farmers in Vidarbha, Buldhana, and Seoni shifted to maize due to ethanol demand, pushing prices from ₹1,700–1,800/qtl to ₹2,300–2,500/qtl. Allowing imports—mainly GM maize, restricted for human consumption—may lower rates, benefiting ethanol and poultry feed sectors but reducing farmers’ earnings.
Nagpur: Last week, American commerce secretary Howard Lutnick asserted that India should buy corn (maize) from the US. If India makes a move similar to its cotton strategy for corn by removing tariffs, it may have a mixed impact, changing the entire dynamics for farmers and industry.In the last couple of years, a major demand from the ethanol industry led to a jump in maize prices. There are fears that imports may bring the rates that farmers fetch back to earlier levels. The question of allowing US imports comes at a time farmers in Vidarbha have begun seeing it as an alternative to cotton or soyabean, which have traditionally fetched low rates.The ethanol factor led even Vidarbha farmers to gradually shift to maize cultivation as against cotton and soybean. It has been a major crop in districts like Chhindwada and Seoni of neighbouring Madhya Pradesh. In Vidarbha, Buldhana and Washim are the main centres. However, the area has also tripled in districts like paddy growing Bhandara and Gadchiroli, reaching 17,000 hectares in two years, said govt sources. From Rs1,700 to 1,800 a quintal, the prices have touched Rs2,300 to 2,500 per quintal due to the ethanol factor.Easing US imports by removing the 45% duty or reducing it can bring down the rates that farmers get.
Sources say that at the current rates in the international market, the landed price of US maize comes to a little over Rs1,700 a quintal in India. However, the situation for maize is not as simple as that of cotton. The US largely grows genetically modified (GM) maize, which is not allowed in India for human consumption. However, it is learnt that there is lobbying for India to at least allow the use of American maize for the ethanol industry.Sources said even that may bring a substantial cut in the market rates. On the other hand, it may bring cheaper feedstock for the ethanol makers. A cut in maize rates can help in reducing ethanol rates too, said sources.Even the poultry industry, which is complaining of high prices of feed, would be eased due to the overall impact. Even earlier, the poultry feed makers had demanded easing of import, which has not been heeded due to the GM factor, said sources.Maize is the main source of poultry feed. Though the US produces GM maize, it is expected that the Indian govt may not allow its use as poultry feed, says an official handling procurement for one of the major poultry feed makers. The source accepted that close to 60% of maize is consumed by the poultry feed industry, and around 22% goes for ethanol manufacturing. The rest is distributed between starch manufacturers, cattle feed, and human consumption, said the source.Maize is predominantly used to make poultry feed; however, the rise of ethanol and its use as a feedstock to make biofuel led to the rates spiralling. An hectare of farm yields 2 to 2.5 tons of maize while soyabean output remains less than half of it, said trade sources.At Buldhana, Vallabh Deshmukh, a director of Mahabeej Corporation, a state govt seed undertaking, said farmers in the district are fast shifting to maize due to the better rates. Last year, both soybean and cotton left the growers disappointed. However, easing imports may bring down the rates.A farmer, Radhesyam Sahu, at Seoni in Madhya Pradesh, says the crop is expected post-Diwali. “Last year, I fetched around Rs2,300 a quintal. Ethanol plants in Jabalpur and Seoni buy the produce. Imports would bring down the rates,” he said.
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Source : The Times Of India
