Amid hike in demand for ethanol, India may become importer of corn

India’s push to produce more corn-based ethanol has turned Asia’s top corn exporter into a net importer for the first time in decades, putting pressure on local poultry producers and disrupting global supply chains.

Traditionally, the poultry and starch industries used to absorb most of India’s approximately 36 million tonne of corn production.

The surge in import demand came after India raised the purchase price of corn-based ethanol in January to move away from sugarcane-based ethanol for blending in gasoline/petrol.

Traders estimate that India usually exports 2 million to 4 million metric tonne of corn, but exports are expected to fall to 450,000 tonne in 2024. While the country is set to import a record 1 million tonne of corn, mainly from Myanmar and Ukraine, which grow non-GM corn.

Last year, however, ethanol distilleries switched to using corn, and this year their demand soared after a drought prompted the government to abruptly halt the use of sugarcane for fuel. That led to a 5 million tonne shortfall.

Estimates suggest ethanol distilleries will need 6 million to 7 million tonne of corn annually, a demand that can only be met through imports.

According to government estimates, India will need more than 10 billion litre of ethanol to achieve its 20% blending target, double the amount the country produced in the marketing year ending October 2023. About 3.5 million tonne of corn has been used to make 1.35 billion litre of ethanol this year, nearly four times more than a year earlier, government data show.

Also rising maize prices are pushing poultry producers into losses, as three-fourths of the production cost is spent on feed.

Currently maize imports attract a 50% import duty, while India has allowed imports of about 500,000 tonne at a concessional duty of 15%.

Government data shows that India’s maize imports in the first half of this calendar year 2024 rose to 531,703 tonne from 4,981 tonne a year ago, while exports fell 87% to 241,889 tonne from 1.8 million tonne.