Pakistan has gained at India’s cost in the world corn (maize) market, particularly South-East Asia, as domestic prices are ruling higher than the global prices, exporters and traders said. This is in view of demand from the poultry and starch sectors besides for ethanol production amidst drop in the coarse cereal’s production this crop year to June.

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According to the Ministry of Agriculture and Farmers’ Welfare, the production of maize during kharif and rabi seasons has been pegged at 32.47 million tonnes (mt) against 35.36 last crop year. The hard crop’s production has been projected lower in kharif as well as rabi season.

Farmgate prices

On the other hand, with the Centre banning diversion of sugarcane for ethanol production, the demand for maize has increased. Apart from this, there is an increased demand from poultry and starch sectors for maize. “Indian maize is out of the global market as domestic prices are higher. Prices at the farmgate are around ₹2,150 a quintal. This itself translates to $260/tonne in the global market putting India out,” said a New Delhi-based exporter.

“India’s loss is Pakistan’s gain in the Asian market. It is selling maize at $240-50 a tonne. In contrast, our prices are over $300,” said M Madan Prakash, President, Agri Commodities Exporters Association.  

In the domestic market, the weighted average price of maize is currently ₹2,132 a quintal compared with ₹2,039 a year ago. 

USDA’s Pak projection

According to the International Grains Council, maize prices are 35 per cent lower year-on-year with Argentina quoting at $188, US at $189 and Brazil at $191 a tonne free-on-board.

On the Chicago Board of Trade, maize futures are down about 10 per cent at $4.25 a bushel ($161.31 a tonne). Prices are lower this year as global production is forecast to be 1,234 mt compared with 1,163 mt last year.

The US Department of Agriculture said Pakistan’s maize exports are likely to top 1.5 mt on good harvest, lower feed demand resulting in a good exportable surplus. Vietnam, Malaysia and Sri Lanka have turned out to be the top buyers. “Though there are quality issues with Pakistan’s maize, buyers are opting because of the price. For India, only some loyal buyers in eastern Malaysia are purchasing,” said Prakash. 

Poultry sector seeks zero duty imports

According to the Agricultural and Processed Food Products Export Development Authority (APEDA), Indian exported 1.34 mt of maize during April-December 2023 valued at $400 million, while shipments in the 2022-23 fiscal were 3.45 mt valued at $1,116 million.

Maize on CBOT is between ₹12,000-14,000 a tonne and the poultry sector wants to import it. “Even if the government imposes the 50 per cent duty, it will still work out to be a cheaper option,” said a trade analyst.

The poultry sector, in particular, has been urging the Indian government to allow duty-free import of corn, including genetically-modified corn, in view of rising demand, particularly from the ethanol production units.  

The government permits import of about 5 lakh tonnes of maize under the tariff rate quota regime where a 15 per cent concessional duty is imposed. However, no such import has been permitted since 2020, when maize prices surged in the domestic market. “Demand from the ethanol sector is strong for maize as the production units are not able to get the other alternative in damaged rice grains,” said the analyst.

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As such, the government has stopped the Food Corporation of India from supplying damaged grains to the ethanol units on lower rice production. The Ministry of Agriculture has pegged kharif and rabi rice production at 123.82 mt compared with 125.52 mt last year. Rice production this year has been affected by El Nino-induced deficient rains across the country since June 2023.  “As of now, exports are down to a trickle,” said Prakash.