Maize buyers lose Rs 50 a quintal due to multiple intermediaries: KPMG

Exports in 2014-15 seen higher at four million tonnes

India's maize sector, which includes the poultry feed segment, stands to gain Rs 50 for every quintal of the commodity purchased directly from farmers, compared with the same purchased through traders or brokers, a study by global consulting firm KPMG showed.

The study, released at the Indian Maize Summit here on Thursday, noted the industry is not able to procure the commodity directly from farmers due to fragmented land holdings, although there has been phenomenal growth in maize in India at the rate of 5.5% from 2004-05 to 2013-14.

The growth has come largely on the back of increased use of hybrid seeds, so much so that studies show that by 2050, almost 90% of the country's maize area will be under these seeds.

Consumption of the commodity rose four% during 2004-05 to 2013-14, while the acreage increased by 2.5%.

India exports over three million tonnes of maize a year, which is expected to rise further. However, exports have been constrained by 20-30% after harvest losses. "India might export around four million tonnes of maize in 2014-15," said Sain Dass, president of India Maize Development Association. Exports in 2013-14 is pegged at 3.6 million tonnes.

According to the study, India should take advantage of its geographical location and explore exporting maize to countries such as Japan, Korea and China. Currently, the US, Brazil and Argentina are the top exporters to these destinations. At present, almost 80% of Indian maize is exported to Vietnam, Indonesia and Malaysia.

"Domestic prices play a critical role in determining demand for maize. If the domestic price is higher than those prevailing globally, the demand of maize for export will decrease, resulting in lower production," said Ashok Gulati, chair professor of agriculture, ICRIER and former chairman Commission for Agricultural Costs and Prices.

In 2013-14, the minimum support price of maize was fixed at Rs 1,310 a quintal, the same as paddy, to encourage farmers in northern India to shift from paddy to maize.

Maize demand in India is prevalent all through the year, but its supply is highly skewed as over 77% of its annual production of 22-23 million tonnes come during the kharif season.

"There is a potential to increase the production of maize during the rabi season as well in the coming years. The rabi maize has a higher yield of four tonnes per hectare as against 2.5 tonnes in the kharif season," the study noted.