India’s Maize Exports At Six-Year High: Here’s What Stakeholders Say Whether The Trend Can Be Sustained

India’s maize (corn) exports have surged to a six-year high in the first half of the current fiscal with shipments already having trebled compared with the whole of last fiscal.

This fiscal’s shipments are the highest since 2014-15, when India exported 28.25 lakh tonnes valued at $66.72 million (Rs 4,037.51 crore). Since then, though maize production has hit record levels of over 28 million tonnes, exports have lagged.

Statistics from Agricultural and Processed Food Products Export Development Authority (APEDA) show that maize exports in the first half of the fiscal were 9.22 lakh tonnes valued at $184.52 million (Rs 1,376.83 crore) compared with 3.70 lakh tonnes worth $142.78 million (Rs 1,019.30 crore) the whole of the last fiscal.

According to APEDA statistics for April-November, exports of other cereals, which includes maize, were 15.04 lakh tonnes valued at $327 million (Rs 2,389.22 crore).

Drop In Shipments After 2012-13 Record Shipments

Maize exports have nosedived since record shipments of 47.88 lakh tonnes worth $1.03 billion (Rs 7,096 crore) in 2012-13, before the change in fortunes witnessed this fiscal.

In this background, can India sustain the maize export trend seen this fiscal?

Before that, one has to see what is pushing India’s maize exports this fiscal. One of the main reasons for the higher shipments is Bangladesh, which has imported a record 67 per cent of the commodity shipped out of India.

The Bangladesh Factor

Bangladesh imported a record 6.18 lakh tonnes valued at $122.25 million till September. Before this, the neighbouring nation had imported a maximum of 5.16 lakh tonnes worth $139.93 million during the whole of 2012-13.

According to exporting house Bengani Food Products Pvt Ltd managing director Bimal Bengani, Bangladesh has bought over 7 lakh tonnes since April this year and it could have imported at least 2lakh tonnes since October when the Kharif crop harvest began.

The rise in exports comes within months after domestic users such as the poultry and starch industries raised a hue and cry over maize not being available in ample quantities last year.

More than the availability, they complained of domestic prices being unviable for the sectors.

“Last year, prices had surged to Rs 26 a kg and we had to import to fulfil our requirements,” said Vangili Subramanian, president, Tamil Nadu Egg Poultry Farmers Marketing Society (TNEPFMS).

Current Maize Prices Ruling Below MSP

Currently, maize is available at Namakkal in Tamil Nadu, the hub of the poultry industry, at Rs 15 a kg.

Maize is ruling at different rates between Rs 1,200 a quintal and Rs 1,400 depending on the quality and moisture levels, though below the minimum support price of Rs 1,850 a quintal fixed for the current season (July 2020-June 2020) across the country.

Bengani said that Bangladesh has imported maize from India at prices between $200 (Rs 14,700) and $240 (Rs 17,650) a tonne, much lower than MSP.

Vietnam has also been buying some quantities of maize from India, he said.

Globally, maize prices are quoted between $232 (Rs 17,000) a tonne from the US and $243 (Rs 17,750) from Argentina – all free-on-board. This will now give more headroom for increasing offer prices for exports. Simultaneously, domestic prices will likely gain.

Higher Kharif Production Estimated This Year

According to Chennai-based exporting firm Rajathi Group director Madan Prakash, maize exports have gained this year in view of a good crop this year during Rabi and Kharif.

According to the Ministry of Agriculture and Farmers’ Welfare, Rabi maize that hit the markets in April this year was a record 9.01 million tonnes.

Kharif crop, as per the Ministry’s first advance estimates of foodgrains for 2020-21, will likely be 19.88 million tonnes against 19.68 million tonnes last Kharif season.

“Getting material for exports is not an issue, though we have been affected by a shortage of containers. The maize crop will now begin to arrive from Andhra Pradesh and Karnataka. Exports can continue till May,” said Prakash, whose Rajathi Group exports agriculture products.

Exporters say that maize shipments from the country are feasible as long as export offer prices reflect the global market. “Once Indian domestic prices touch Rs 1,700 a quintal, we lose out on export opportunities,” said an exporter, without wishing to identify.

Advantages For Indian Maize In Global Market

Prakash says Indian maize can fill in demand as poultry feed as long as prices can match Brazil.

“Even if our prices are at par with Brazil, we will gain. One reason is freight advantage and shorter turnaround time. We can deliver within 20 days, whereas Brazil shipments take 45 days.

“Second, we can export in containers (24 tonnes) and small bulk vessels of 5,000 tonnes capacity,” he said.

Indian maize exports can continue around current levels in the long-term if prices are competitive for importers and production can meet domestic demand.

“At these levels, we can export to Bangladesh and Vietnam for feed purposes. It would be better if exports remain at these levels and we hope this trend will continue,” said a multi-national company’s export-import official, not wishing to identify.

However, he said that the problem with regard to maize in India was that demand from the poultry and starch industries were increasing.

“Both these industries are witnessing good demand in view of their growth. Our poultry sector growth has been in double digits for over a decade,” the official said.

Exporters say that once domestic prices exceed global prices, there are chances of Indian maize exports turning bleak, like the previous fiscal.

One of the features of maize exports this year is that fears of shortage in the domestic market are being discounted.

TNEPFMS' Subramanian and Bengani said that production this year would ensure ample availability in the domestic market. In fact, users project production to be higher than the first estimates made by the Ministry of Agriculture.

Maize production this year has been boosted by farmers in Bengal switching over from jute. “Maize is not as labour-intensive as jute and last year prices for the fibre were low, leading to the switch-over” said a raw jute industry source.

Bengani, who expects demand for Indian maize at current prices, cautions that domestic users will have to pay prices closer to the MSP or else they could face problems in finding supplies.

Rajathi Group’s Prakash said that the Indian government should allow maize exports, while also permitting imports, thus allowing a free play for market forces citing last year’s example.

When maize prices zoomed last year, domestic users imported 3.18 lakh tonnes, up from about 30,000 tonnes in 2018.

Imports are facilitated by the Centre annually allowing 5 lakh tonnes shipments into the country under the tariff rate quota (TRQ) regime. This allows imports of maize at a lower customs duty of 15 per cent compared with the normal 50 per cent.

Normal imports also attract 5 per cent Integrated goods and services tax and 10 per cent social welfare surcharge.

“We can export maize on a long-term basis if the Union government doesn’t resort to panic reaction such as banning shipments as in the case of onions or even maize some years ago,” said Prakash.