Ethanol push turns India into corn importer

India appears set to become a permanent net importer of corn with the government promoting ethanol in gasoline to reduce carbon emissions; this has pushed ethanol distilleries to start using domestic corn produce, which has traditionally been absorbed by the poultry and starch industries

Key Facts About Maize

1. About Maize:

   1. Scientific Name: Zea mays L.
   2. Versatility: Known as the "queen of cereals" due to its high genetic yield potential and wide range of uses in food, animal feed, and industrial products.
   3. Global Production: The USA is the leading producer, with high productivity levels.
   4. Indian Contribution: Maize is the third most important food crop in India, contributing about 9% to the national food basket and adding over Rs. 100 billion to the agricultural GDP.

2. Growing Conditions:

   1. Soil Types: Thrives in loamy sand to clay loam soils; optimal growth in well-drained soils with high organic matter and neutral pH.
   2. Avoid: Poorly drained and saline soils to maintain productivity.
   3. Rainfall: Requires 50-100 cm of rainfall.

3. Seasonal Cultivation:

   1. Growing Seasons: Can be cultivated in Kharif, Rabi, and Spring seasons. Kharif maize typically has lower productivity compared to Rabi maize due to rainfed conditions and biotic/abiotic stresses.
4. Global Ranking:
   1. Production: India is the 5th largest producer of maize (as of December 2023).
   2. Export: India was the 14th largest exporter of maize in 2022.

5. Major Producing States:

   1. Karnataka, Madhya Pradesh, Bihar, Tamil Nadu, Telangana, Maharashtra, Andhra Pradesh.

6. Initiatives:

   1. National Food Security Mission (NFSM)

   2. Waxy Maize Hybrid

   3. All India Coordinated Maize Improvement Project (AICMIP)

   4. India Maize Summit 2022

Why Has India Become a Net Maize Importer?

1. Ethanol Blending Goals:

   1. Target: Increase ethanol content in gasoline to 20% by 2025-26.
   2. Policy: The National Policy on Biofuels (NPB) 2018 promotes blending of maize-based ethanol, enhancing production capacities.
2. Shift from Sugarcane to Maize:
   1. Drought Impact: A drought led to reduced sugarcane availability for ethanol, shifting the focus to maize.
   2. Production Increase: India produced 34.6 million tonnes of maize in 2023-24, with plans to double production to meet demand.

3. Impact on Domestic Supply:

   1. Shortfall: Increased ethanol production has caused shortages in poultry and starch industries, leading to maize imports for the first time in decades.

How Is Excess Import of Maize Impacting Local Industries?

1. Competition for Maize:

   1. Industry Impact: Poultry and starch industries face competition from ethanol producers for maize supplies.

2. Soaring Maize Prices:

   1. Price Increase: Demand surge has driven local maize prices above global levels, impacting poultry producers who rely heavily on maize for feed.

3. Poultry Industry Strain:

   1. Cost Issues: Rising feed costs have put poultry growers in financial distress, prompting calls for the removal of import duties and approval of GM maize for feed.
   2. Production Costs: High costs threaten the sustainability of poultry farming. Small-scale farmers are using alternative feed sources.

4. Incentives for Corn Cultivation:

   1. Increased Acreage: High maize prices are encouraging farmers to expand maize cultivation. Area under summer-sown maize rose by 7% from 2023.
   2. Farmer Benefits: Farmers are currently benefiting from high prices, while poultry producers are scaling back until new season supplies stabilize prices.

Global Implications of India’s Excess Import of Maize

1. Shift in Trade Dynamics:

   1. Import Trends: India’s shift from exporter to importer affects global maize prices, which had been trading at near four-year lows.
   2. Sources: India is importing maize from Myanmar and Ukraine.

2. Increased Prices in Exporting Countries:

   1. Price Surge: Indian demand has pushed maize prices in Myanmar from USD 220 to around USD 270 per metric ton.
   2. Domestic Challenges: Rising costs are straining industries in exporting countries that have relied on affordable maize supplies.

3. Supply Chain Adjustments:

   1. Alternative Sources: Traditional buyers of Indian maize, like Vietnam, Bangladesh, Nepal, and Malaysia, are now sourcing from South America and the US due to high Indian maize prices.

4. Permanent Importer Status:

   1. Future Projections: NITI Aayog forecasts that India’s ethanol production capacity needs to grow to meet the demand of 1,016 crore litres for EBP by 2024-25.
   2. Long-term Imports: With rising demand, India is expected to remain a net importer of maize, as domestic production may not keep pace with the increased ethanol production requirements.

Steps Needed to Enhance Maize Production in India

1. Technological Adoption:
   1. Biotech Traits: Adoption of pest-resistant biotech traits and high-yielding hybrids can enhance maize productivity.
   2. Yield Comparison: The US achieves yields of over 11 tonnes per hectare, while India’s average yield is 3.3-3.8 tonnes per hectare, suggesting significant potential for improvement.
2. Diversification and Intensification:
   1. Resource Conservation: Switching from water-intensive rice to maize in irrigated areas can conserve resources and boost production.
   2. Efficiency: Maize requires less power and water compared to rice, making it a viable alternative for water-scarce regions.
3. Government Support:
   1. Production Targets: To meet the E20 blending target, India needs to increase maize production from 346 lakh tonnes to 420-430 lakh tonnes by 2024-25, and further to 640-650 lakh tonnes by 2029-30.
   2. Incentives: Offering a reasonable MSP, procurement assurances, and transportation subsidies can encourage farmers to boost maize cultivation.
   3. Cooperative Engagement: Involving mega cooperatives in the maize value chain can replicate the success seen in the White Revolution.
4. Poultry and Animal Feed:
   1. Multigrain Use: Maize can be used more broadly as a multigrain cereal, supporting poultry and animal feed needs.
   2. DDGS Production: High-protein distiller’s dried grains with soluble (DDGS) from ethanol production can supplement feed, meeting both food and fuel security needs.

Conclusion

India’s transition to a net importer of maize reflects a significant shift in agricultural and energy policies, driven by increased ethanol production. While this change impacts local industries and global supply chains, addressing technological, economic, and policy-related challenges can enhance domestic maize production and ensure food, feed, and fuel security in the future.

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