India’s push for increased corn-based ethanol production has transformed the country from Asia’s top corn exporter into a net importer for the first time in decades, impacting local poultry producers and global supply chains. This shift began after India raised the procurement price of corn ethanol in January to encourage a transition away from sugarcane-based ethanol for gasoline blending. The government’s aim to promote ethanol use for reducing carbon emissions has complicated corn availability for the feed industry, necessitating advancements in technology to meet demands.
As India ramps up corn imports, global prices—currently near four-year lows—are likely to rise. Local poultry producers are facing soaring feed costs as corn prices increase, prompting calls for the government to remove import duties and lift its ban on genetically modified (GM) corn, which limits their purchasing options. While India typically exports 2 to 4 million metric tons of corn, projections for 2024 indicate exports will plummet to 450,000 tons, with imports expected to reach a record 1 million tons, primarily from Myanmar and Ukraine.
Historically, India’s corn production of around 36 million tons primarily served the poultry and starch industries. However, increased demand from ethanol distilleries, driven by a government decision to limit sugarcane usage after a drought, has created a competitive market for corn supplies. The All India Poultry Breeders Association reported a 5 million ton shortfall, leading to rising prices as the poultry and starch sectors vie for limited supplies.
To meet the target of increasing the ethanol share in gasoline to 20% by 2025-26, India will require over 10 billion liters of ethanol—double the current production. In the past year, corn usage for ethanol surged to 3.5 million tons, significantly impacting the feed supply.
As corn prices climb, poultry producers are struggling, with feed costs accounting for about 75% of their expenses. Uddhav Ahire, chairman of Anand Agro Group, highlighted that the cost of producing a broiler has risen to 90 rupees, while farm gate prices are only 75 rupees, leading to unsustainable losses. The All India Poultry Breeders Association is pushing for 5 million tons of duty-free corn imports to alleviate the crisis.
Meanwhile, farmers have responded to rising corn prices by increasing their corn acreage by 7%, as reported by the farm ministry. Some small poultry farmers are substituting corn with broken rice and wheat stalks to manage feed costs.
As Indian demand surges, corn prices in Myanmar have risen to around USD 270 per metric ton, incentivizing more plantings. Corn imports from Myanmar are tax-free, benefiting both exporters and farmers. Additionally, starch manufacturers are importing duty-free corn from Ukraine under India’s Advance License Scheme, which allows imports as long as an equal amount of finished goods is exported.
Overall, India’s corn imports soared to 531,703 tons in the first half of 2024, a significant increase from just 4,981 tons the previous year, while exports fell by 87%. This shift marks a notable reversal in trade dynamics, reflecting the challenges faced by both domestic producers and global markets.
Source: The Economic Times of India
