April 15, 2019
Well a bit late but now the government has permitted import of 100,000 tonnes of feed-grade maize (corn) through state agencies with a view to augment domestic availability and contain exorbitant prices.
The Indian government should have seen the shortage coming well in advance as the bullish price signals have been on the horizon for an extended period. But, the government remained self-righteous with its overestimation of the maize crop when in reality inadequate precipitation or drought-like conditions as also pest attack had hurt yields.
The poultry industry, which uses maize as feed has been crying hoarse for months over the steep spurt in maize prices. As compared with the minimum support price of ₹1,700 a quintal, maize rates have been ruling at least 30 percent higher, hurting the economics of the poultry industry.
The decision to allow a meager quantity of one lakh tonnes and that, too, through state trading agencies is most unlikely to bring any real and quick relief to the beleaguered poultry industry.
Actual users have to apply to a State trading agency which in turn will consolidate and place import orders. Cargo will not arrive before the end of May. In other words, the whole process will take at least two months, defeating the purpose.
Given the current international prices (around $185 a tonne), exchange rate (₹69 to a dollar) and customs duty (15 percent ad valorem), there is import parity.
The cost at the port (duty-paid) would be about ₹20,000 a tonne. Even after adding local freight and related expenses, the import will leave a decent margin. To be sure, the market has already begun to take cognizance of the prospective import and the price is likely to soften.
Ukraine emerges as a good source of supply and is in a position to meet India’s needs. It does not cultivate genetically-modified corn.
The Rabi crop from Bihar is likely to arrive towards the end of April, which means the pain for the poultry industry will extend for a few more weeks.
Production and consumption of poultry meat and eggs have been expanding with rising incomes and changing food habits.
No wonder, domestic demand for maize from the starch and feed industry has been rising steadily. For the poultry sector, maize and soya constitute up to 90 percent of the feed ingredient and their prices have been volatile, often throwing the sector’s economics into disarray.
It is necessary to boost maize production to keep up with expanding consumption demand.
The prospect of doubling the current yield of 2.5 tonnes a hectare is really good, but efforts are required to infuse technology and incentivize cultivation.
Without a doubt, maize production is a success story for India, but going forward there will be challenges.
Indian maize is at the limit of heat tolerance. Therefore, we need to research the introduction of heat-tolerant varieties.