Asia’s largest corn exporter is becoming a net importer for the first time in decades due to the growing demand for ethanol production. This shift is straining regional poultry farmers and disrupting international supply networks.
India raised the procurement price of corn-based ethanol in January, driving up import demand. This shift encouraged a move away from using sugarcane-based ethanol for gasoline blends.
India is on track to become a permanent net importer of corn as the government actively promotes ethanol in fuel to reduce carbon emissions. Additionally, it is working to ensure a steady supply of affordable sugar in the world’s largest market for the sweetener.
The likelihood of India increasing its corn imports is expected to boost world prices, which are now hovering around four-year lows.
India’s poultry producers, struggling with skyrocketing feed costs as domestic corn prices exceed global averages, are pressing the government for action. They are urging the repeal of the prohibition on genetically modified (GM) corn and the removal of import duties. Their purchasing options are severely limited by the prohibition.
India usually exports between 2 and 4 million metric tons of maize each year. However, merchants predict that in 2024, exports will drop to 450,000 tons, while the nation will import a record 1 million tons, primarily from non-GM corn-growing countries like Myanmar and Ukraine.
Historically, the majority of India’s 36 million tons of corn production has gone to the starch and chicken industries.
Ethanol distilleries used corn last year. This year, their demand increased after the government abruptly stopped using sugarcane as fuel due to a drought. According to a representative of the All India Poultry Breeders Association, this resulted in a 5 million tons shortage.
“Now, the poultry and starch industries are battling with distilleries to get their share of supplies, and this fight is keeping prices high,” said Nitin Gupta, senior vice president of Olam Agri India.
Olam projects that ethanol distilleries will require between 6 and 7 million tons of corn per year. Gupta asserts that imports are the only way to meet this demand.
Due to the expediency of Indian maize, traditional export markets including Vietnam, Bangladesh, Nepal, and Malaysia were forced to obtain their supply from South America and the United States.
“Vietnam has cut down its imports of corn from India recently because India’s prices are too high,” said a Ho Chi Minh City-based trader.
ETHANOL FOR CLIMATE FIGHT
India intends to raise the percentage of ethanol in gasoline from its current 13% to 20% by 2025–2026 in an effort to reduce carbon emissions.
According to government projections, India will require more than 10 billion litres of ethanol to meet its 20% blending objective. This is double the amount of ethanol the nation produced in the marketing year that concluded in October 2023.
According to government figures, the country has produced 1.35 billion liters of ethanol this year. This production came from about 3.5 million tons of corn, which is approximately four times more than last year.
“Sugarcane can start contributing more from the next season, but it cannot contribute more than 5 billion litres. The government’s priority is to fulfil domestic sugar consumption,” said a senior government official.
Increasing the amount of ethanol produced from corn to 3 billion liters would require about 8 million tons of corn. This information comes from an official who wished to remain anonymous because they were not authorized to speak to the media.
POULTRY GROWERS CRY FOUL
Poultry farmers are experiencing a loss due to rising corn prices, as feed makes up 75% of their production expenses.
Uddhav Ahire, chairman of Anand Agro Group in Nashik, western India, reports that the farm gate price of a broiler is approximately 75 rupees. However, production expenses have increased to 90 rupees.
“The poultry industry cannot sustain such losses for a prolonged period,” he warned.
Demands for 5 million tons of duty-free corn imports are being made by the Compound Livestock Feed Manufacturers Association and the All India Poultry Breeders Association.
A request for comment was not answered by a government spokesman.
“Since there is a shortage, more corn imports should be allowed at zero duty,” Ahire added. “The government should allow GM corn for feed purposes.”
India permitted imports of about 500,000 tons of corn at a concessional duty of 15%, although imports of corn are subject to a 50% import duty.
Farmers like Krishna Shedge in Jalna district decreased their soybean planting to increase the area planted with summer-sown corn. This shift has raised the corn acreage to 8.7 million hectares from 7% a year ago, according to farm ministry data.
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