Commodity News

Market Picture remains gloomy for Maize – No relief for Indian Farmers

Abhijeet Banerjee
Abhijeet Banerjee
maize

The current demand supply and situation of Maize remains discouraging for farmers, since they are not optimistic about any improvement in net realization from sale of their crop in near future. Maize markets therefore continue facing the problem of abundance against subdued demand situation. Although poultry product market has started improving in last few weeks yet most of the poultry units have turned financially weaker in past couple of months ever since Corona outbreak started. Rumors about poultry products can be one of the carriers of Corona virus, has created problems for poultry product consumption. As a result quantity required for manufacturing feed rations has dropped significantly, leading to lower intake of maize. 

Since maize consumption in poultry feed industry nearly 60% of the production, net sales in maize has gone down significantly across the country. Sowing operations have gone well with government’s efforts during the lock down and as per official reports maize in the country has been sown in approximately 64 Lakh hectares as of July 16, 2020 which is higher than slightly more than 6 Lakh hectares compared to corresponding period last year. Current prices in major producing states are nearly Rs 300-500 on a quintal lower versus January end prices. Prices in Sangli have gone down by nearly 50 Rs/quintal in a fortnight. Similarly Rabi season Maize in Gulab Bagh mandi of Bihar are currently down Rs. 25/qtl compared with prices prevailing a fortnight back. As of July 17th, superior grades in Sangli and Gulabbagh were quoted around Rs.1465-1470/qtl and Rs.1230-1235/qtl respectively.

Farmers Forced to sell below MSP: There are reports regarding farmers having no other options but to sell their produce much below the minimum support price of Rs1850/qtl amid lacking market demand and procurement from government agencies. The minimum support price (MSP) of this crop was hiked to Rs 1,850 per quintal for the 2020-21 Kharif season and was at Rs 1,760 per quintal in 2019-20 Rabi season. Maize farmers in Punjab are being forced to sell their produce at Rs 1,000 to Rs 1,200 per quintal in the market. Earlier the state government has been actively promoting maize cultivation as part of its crop diversification plans. But now Punjab government’s own agencies have failed to come to offer any relief for the maize farmers who are forced to sell their produce at 40-60 per cent lesser than the crop’s MSP.

maize

Reducing Import Quota Enhances the Concern: With  Government’s decision to import maize under reduced import duties, chances of getting better prices in longer run has reduced further for maize growers.  The government has in a notification (dated 23 June) allowed the import of 5 lakh MT of maize at a concessional customs duty of 15 per cent each under the Tariff Rate Quota Scheme. India normally imposes a 50-60 per cent import tax on the grain and it is worth noting that the country has been the world’s seventh-biggest maize producer and net exporter till 2018. 

There is no respite for maize growers as of now and there is no clarity as to when the market situation will be favoring a price rise. The institutional demand from hotels and restaurants is yet to pick up as lockdown is yet to be withdrawn completely. As maize consumption is maximum for the poultry feed industry, unless demand for poultry products improve significantly, maize growers in the country will continue to suffer financially. The Covid scare has hit the growers significantly and leading producing states like Karnataka was forced to announce a cash relief of Rs. 5,000 per maize grower in order to overcome the ongoing crisis.

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