The Indian poultry industry is bracing for a potential surge in feed prices if the government proceeds with its plan to divert maize for ethanol production, as maize is a primary ingredient in poultry feed. With the government setting a cap of 1.7 million tonnes of sugar for ethanol production to compensate for an expected decrease in sugarcane output, it aims to bridge the gap by permitting higher quantities of maize for ethanol production to achieve its target of 15 percent ethanol blending with petrol this year. Oil marketing companies (OMCs) have increased the procurement price of ethanol from maize and other grains to Rs 71.86 a litre, sweetening the deal.
While the exact volume of maize to be diverted hasn’t been disclosed by the government, the poultry industry anticipates that 10-20 percent could be used for ethanol production, potentially exacerbating the demand-supply gap and causing maize prices to spike. Neeraj Kumar Srivastava, former Chairman of the Compound Livestock Feed Manufacturers Association (CLFMA), highlighted that the poultry feed industry consumes about 60 percent of the maize produced, making it the largest consumer of the grain. Out of an annual production of approximately 35 million tonnes, the poultry sector absorbs 21 million tonnes.
Srivastava suggested that the government should consider waiving the import duty on genetically modified (GM) maize to alleviate the situation. He noted that at current rates, the landed prices for imported maize would be around Rs 20 per kg, which would be ideal for the feed industry. Maize prices in the country rose from Rs 21-22 per kg to Rs 25 due to a poor kharif harvest, particularly in Karnataka, but hopes are high for a better output with higher acreage of the rabi crop. However, prices will depend on the quantity diverted for ethanol production.
Despite expectations of higher maize availability and stable soya prices, specific numbers for maize diversion for ethanol production are awaited from the government. The increase in maize prices has led to costlier poultry feed, prompting many small poultry farms to reduce production or cease operations.
Bigger poultry companies have managed to weather the situation so far, with some having raised product prices when feed prices spiked last year. However, the industry remains cautious as the demand for maize rises in general and diversion for ethanol production could further impact supply.
Egg producers have been somewhat shielded from the effects of high feed prices due to a rise in exports, especially to Gulf countries amid disruptions in supply chains from Ukraine and Turkey due to the Russia-Ukraine war. This surge in demand has buoyed the Indian egg market, particularly in Namakkal, the country’s egg hub, where production has increased significantly. Domestic consumption has also improved post-pandemic.
