India's corn exports becoming unviable and uncompetitive on price
With the price of maize rising, export of the commodity is becoming unviable and uncompetitive. The price of maize, also called corn, has risen 75-80 per cent in the past one year from Rs 12 per kg to Rs 20-21.
As a result, starch and liquid glucose prices have also risen, with starch selling at Rs 31-32 a kg. India’s starch and value-added demand, however, is very good, especially from the pharma and textile sectors.
High input costs are affecting exports, which used to be 15 per cent of the crop — around 2-3 million tonnes — a few years ago. The principal raw material for Indian starch is the non-genetically modified (GM) market, although potato is also used for starch extraction, albeit to a limited extent.
The production of maize in FY19 is estimated at 29 million tonnes, which was just 22.6 million tonnes in FY16. However, the poultry sector is a big consumer of maize. Around 60 per cent of the maize goes towards poultry and feed segment, while 20-25 per cent is diverted towards production of industrial corn starch.
The domestic starch industry has also voiced concerns over sub-optimal corn supply this season, owing to less-than-normal rainfall last year and the consequent higher corn prices, which could potentially impede growth momentum and also hit exports.
“The corn prices have shot up by almost 40 per cent over the past 3-4 months due to a higher minimum support price (MSP) this season, and crop loss arising out of scanty rainfall,” Sahyadri Starch and Industries managing director Vishal Majithia told Business Standard.
Last year, the Centre had increased the MSP for kharif maize by Rs 275 per quintal, or 20 per cent, to Rs 1,700 per quintal for 2018-19, from the Rs 1,425 earlier.
“Higher corn prices have made exports uncompetitive vis-a-vis peers, notably China and Turkey,” he said, and claimed exports were already down by 40-50 per cent, which was also affecting the local market sentiment due to the consequent oversupply. The Indian poultry and starch industry is awaiting the permission for duty-free corn imports to supplement demand and provide for unabated production cycle catering the domestic and international markets.
Public sector trader MMTC has already floated a circular among the local players, including starch manufacturers, to apply for corn imports, said Amit Sachdev, the South Asia (India, Bangladesh, and Sri Lanka) representative for the US Grains Council.
Corn imports to the tune of 2,25,000 tonnes was last allowed in 2016 under the tariff rate quota (TRQ) at 0 per cent duty, although the country imposes 60 per cent tax on overseas corn procurement and has the reputation of being corn exporter.
Karnataka, Andhra Pradesh, Tamil Nadu, Rajasthan, Maharashtra, Bihar, Uttar Pradesh, Madhya Pradesh and Gujarat account for 85 per cent of India’s maize production.
Source :- Business-standard.com