Derivatives

Healthy prospects for maize

G Chandrashekhar | Updated on June 29, 2014

Promise of plenty India must raise output

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Strong demand from feed and fuel users and production risks are bullish for maize

Maize is among the few success stories in the recent farm history of India. The cereal is so versatile that it lends itself to multiple uses — food, feed, fuel and ferment. As a cereal, maize is used as ingredient in food preparation; it is feed for poultry and livestock; it is feedstock for biofuel (ethanol); it is used as raw material in distilleries; and for starch production because of its high starch content (60 per cent).

Harvested in two seasons (kharif and rabi), the annual output continues to gallop. The share of the rabi crop (harvested in February/March) has been rising steadily in recent years with notable contribution from Bihar, Andhra Pradesh and Tamil Nadu. The introduction of new hybrid seed varieties has made significant contribution to the crop’s success. Current yields are about 2.5 tonnes a hectare. There is potential to double the yields to the global average of five tonnes a hectare by adopting modern technologies.

Global corn production is about 980 million tonnes, with the US alone accounting for 350 million tonnes. The US is the world’s largest exporter of corn (48 million tonnes). China, Brazil, Ukraine and Argentina are other major producers. In the US, a substantial part of the cereal is used for ethanol production with biofuel mandate and incentive in place. Firm crude oil prices (around $100 a barrel) have encouraged increasing biofuel usage. With diverse usage (food, feed, fuel and industrial), global corn prices have been relatively firm in recent years.

This has helped India. With rising production and favourable world market (higher export prices, weaker rupee) India has been exporting 3.5-4.5 million tonnes of maize annually in the last three years. South-East Asian nations Indonesia, Vietnam and Malaysia are major destinations because of geographical proximity and shorter voyage times. However, quality issues such as aflatoxin /mycotoxin (fungal growth) infestations as well as logistics bottlenecks need to be addressed urgently for retaining the overseas market.

Opportunity for India

Maize consumption within the country has been rising rapidly over the last ten years or so (about 4 per cent annually). The poultry industry accounts for nearly half of the total maize consumption in the country, followed at a distance by the starch industry. With demand chasing supplies, maize growers have generally benefited. Open market prices have generally ruled above the minimum support price.

The production target for 2014-15 is 23 million tonnes comprising 17 million tonnes for kharif and six million tonnes for the rabi season.

However, the forecast of a below-normal southwest monsoon and looming threat of El Nino in the second half of the year are factors to monitor. Delayed and weak onset of south-west monsoon can potentially affect acreage and yields; it is too early to make any meaningful estimate, though.

On the other hand, with excellent weather conditions, the US is poised to harvest a record corn crop this year. The International Grains Council has forecast that more than half the anticipated increase in grain output over the next five years will come from maize which, to a large extent, will reflect the projected relative strength of feed demand over other end uses. During the same period global grain trade is expected to rise strongly, led by maize.

This provides a great opportunity for India. By raising productivity and production, generating export surplus after meeting burgeoning domestic demand, India can capture emerging market opportunities.

Maize needs policy support, investment support and research support.

Published on June 29, 2014

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