Maize Prices Surge 20% in January as Government's Ethanol Plans Drive Demand

Maize prices have experienced a notable 20 percent surge to date in January, compared to rates in October, propelled by heightened demand stemming from the government's move to procure the crop for ethanol production. The shift in focus from sugar to maize for biofuel has caused a ripple effect on prices, with trade estimates indicating a rise to Rs 2,366 per quintal in Gulabbagh, Bihar, and Rs 2,400 per quintal for feed-grade maize in Ahmedabad, Gujarat.

Push for Ethanol Production

India's efforts to promote maize as an alternative to sugar for ethanol production have intensified. In December, the government directed sugar mills to refrain from using cane juice for ethanol, anticipating a decline in sugar production in the 2023-24 marketing year.

Despite the government's push, the agriculture ministry's third advance estimate predicts maize production to be 35.91 million tonnes in 2022-23, which traders argue is insufficient to meet the rising demand, especially as distilleries gear up for ethanol production.

Erratic Rainfall

Lower-than-expected kharif harvests, ranging from 25-27 percent, in certain regions of the country have been attributed to erratic and scanty rainfall during the season, exacerbating concerns about meeting demand.

With the government planning to procure maize on a federal level, farmers have shifted their focus to maize cultivation. Rabi sowing of the cereal has seen a 4 percent increase, reaching 20.51 lakh hectares by January 12, compared to 19.71 lakh hectares during the same period last year, across major growing states.

With the government planning to procure maize on a federal level, farmers have shifted their focus to maize cultivation. Rabi sowing of the cereal has seen a 4 percent increase, reaching 20.51 lakh hectares by January 12, compared to 19.71 lakh hectares during the same period last year, across major growing states.

Corn Production Goals

India aims to boost corn production by 10 million tonnes over the next five years to meet the growing demand for ethanol production and to cater to the poultry industry, which relies on maize as feed. The poultry sector has recently approached the government to consider duty-free imports to fulfill future demands.