09-September-2024-Editorial

MAIZE-BASED ETHANOL AND INDIA’S SHIFT FROM EXPORTER TO IMPORTER

India has been pushing to increase ethanol production, particularly from maize (corn), to achieve its fuel blending goals.

This drive has led to a significant transformation in India’s maize industry, turning the country from Asia’s top maize exporter to a net importer. This shift has impacted local industries and affected global maize supply chains.

About Maize:

• Maize, also known as corn, is scientifically referred to as Zea mays L.
• Often called the “queen of cereals,” it has the highest genetic potential for yield among crops.
• Globally, it plays a key role in grain production. The United States is the world leader in both production and productivity.
• In India, maize is the third most significant food crop, contributing about 9% to the nation’s food basket. Its contribution to agricultural GDP exceeds Rs. 100 billion.
• Maize is utilized in food production, animal feed, and various industrial products.

Growing Conditions:

• Maize thrives in soils ranging from loamy sand to clay loam.
• Optimal growth requires well-drained soils, rich in organic matter and with a neutral pH.
• Ideal rainfall conditions for maize cultivation are between 50 to 100 cm annually.

Cultivation Seasons:

• In India, maize can be cultivated during Kharif, Rabi, and Spring seasons.
• Kharif maize generally has lower productivity due to rainfed conditions and various biotic and abiotic stresses, while Rabi maize tends to be more productive.

Global Ranking and Production:

• India is the fifth-largest maize producer globally (as of December 2023) and the 14th-largest exporter (2022).
• India’s maize production is spread across major states like Karnataka, Madhya Pradesh, Bihar, Tamil Nadu, Telangana, Maharashtra, and Andhra Pradesh.

Government Initiatives:

• National Food Security Mission (NFSM): Focuses on enhancing maize production.
• Waxy Maize Hybrid Program: Aims at developing hybrid maize varieties.
• All India Coordinated Maize Improvement Project (AICMIP): Supports maize research and development.
• India Maize Summit 2022: Discussed ways to enhance maize productivity and meet future demand.

Why Has India Become a Net Maize Importer?

Ethanol Blending Targets:

• India has set an ambitious goal to achieve 20% ethanol blending in petrol by 2025-26, leading to increased demand for maize-based ethanol.
• The 2018 National Policy on Biofuels (NPB) allows for maize and grain-based ethanol production, further boosting the ethanol industry.

Shift from Sugarcane to Maize:

• Due to recurring droughts, the government restricted the use of sugarcane for ethanol production. This has forced ethanol producers to turn to maize as an alternative.
• In the 2023-24 season, India produced 34.6 million tonnes of maize, with plans to double production to meet the growing demand for ethanol.

Impact on Domestic Supply:

• The increased use of maize for ethanol production has created a shortage for traditional users, such as the poultry and starch industries.
• This has led India to import maize for the first time in decades.

How is Maize Import Impacting Local Industries?

Competition for Maize Supplies:

• Traditionally, India’s poultry and starch industries were the main consumers of maize.
• However, the ethanol industry’s rising demand has intensified competition for maize supplies.

Rising Maize Prices:

• The surge in demand has caused local maize prices to soar above global market rates.
• This has created financial pressure on the poultry industry, where maize is a critical component of feed.

Poultry Industry Challenges:

• The rising cost of feed, which constitutes about 75% of poultry production costs, has pushed small-scale poultry farmers into financial distress.
• Some poultry farmers are resorting to using cheaper feed alternatives like broken rice or wheat stalk waste to cut costs.
• The All-India Poultry Breeders Association has urged the government to eliminate import duties and approve the use of genetically modified (GM) maize for animal feed.

Incentives for Farmers:

• Higher maize prices are encouraging farmers to expand their maize acreage, with a 7% increase in the summer-sown maize area in 2023.
• While farmers benefit from high prices, small-scale poultry farmers have been forced to reduce production until prices stabilize.

Global Implications of India’s Maize Import

Changing Trade Dynamics:

• India, previously Asia’s largest maize exporter, is now importing maize, mainly from Myanmar and Ukraine.
• This shift has affected global maize prices, which were previously at a near four-year low.

Price Hike in Exporting Countries:

• Indian demand has pushed maize prices in Myanmar from USD 220 to USD 270 per metric ton.
• This price hike has encouraged more farmers in Myanmar to grow maize.

Supply Chain Adjustments:

• Countries that traditionally relied on Indian maize, such as Vietnam, Bangladesh, Nepal, and Malaysia, are now sourcing maize from the United States and South America due to the steep prices in India.

India’s Future as a Maize Importer:

• NITI Aayog estimates that India will need to import maize in the coming years to meet its ethanol production targets.
• By 2024-25, India will need 1,016 crore litres of ethanol, with maize playing a key role in fulfilling this requirement.

Steps Needed to Enhance Maize Production in India

Technological Innovations:

• India’s diverse agricultural conditions require region-specific technological solutions to improve maize productivity.
• Adopting pest-resistant biotechnological traits and expanding the area under high-yielding hybrid maize varieties can significantly boost production.
• While India has vast maize cultivation areas, average yields remain at just 3.3-3.8 tonnes per hectare—almost half the global average.

Diversifying Crop Choices:

• Maize is a sustainable alternative to rice, especially in water-scarce regions.
• Shifting from rice to maize in irrigated areas like Punjab, Haryana, and Western Uttar Pradesh can conserve water and energy resources while boosting maize output.

Government Support:

• To meet ethanol blending targets, India will need an additional 165 lakh tonnes of maize by 2025.
• Offering a suitable Minimum Support Price (MSP), procurement assurances, and transport subsidies can incentivize farmers to cultivate more maize.

Maize for Animal Feed:

• Maize is critical to meeting the increasing demand for poultry and animal feed.
• The use of Distiller’s Dried Grains with Solubles (DDGS), a byproduct of ethanol production, can meet both food and fuel requirements, contributing to India’s overall energy security.