Starch firms seek ban on maize exports

A dip in the production of maize and rising export demand for the same this year are set to result in the shortage of maize in the domestic market. While the production so far has been around 12 mt, the demand is much higher at 14 mt.

With producers not able to keep pace with the rising domestic demand and steep import duty restrictions, the All India Starch Manufacturers' Association (AISMA) has sent a proposal to the Union ministries of finance, agriculture and commerce, requesting an immediate check on exports and allowing import of maize without the stipulated 15 per cent import duty.

Demand for maize in the domestic market has been rising mainly owing to increasing demand from the poultry and livestock sectors.

Also, ethanol producers are expected to place large orders for the coming few months, maize-based manufacturers said. The break-up of the demand is around 1.45 mt for the starch sector, 7.10 mt for poultry, 1.45 mt for livestock and 3.60 mt for human consumption.

Maize production has fallen from 12.41 mt to 11.5 mt this year, which is a reduction of 0.91 mt. Last year, the delivered price of maize had shot up to Rs 800-850 a quintal as compared with Rs 670 a quintal the year before.

However this year, the prices have been hovering around the Rs 750-780 a quintal mark only because Food Corporation of India (FCI) released its stock of around 1 mt to counter the price rise, said the maize-based manufacturers.

"Despite the onset of a new season, prices continue to go higher than Rs 730-770 a quintal. With the FCI already having released its available stock and the government still not willing to accept the demand-supply deficit, we expect a situation where India will be forced to import maize at exorbiant costs to meet the demand, " said Amol Sheth, president, AISMA.

Maize futures have also been continuously rising. The November futures prices closed at Rs 752 a quintal last week on National Commodity and Derivatives Exchange (Ncdex) against Rs 607 on October 5, a rise of 23.89 per cent.

Similarly December futures prices rose by 23.84 per cent during the same period, closing the week at Rs 774 a quintal against Rs 625 a month ago. On a single trading day on Saturday, the November futures prices rose by Rs 11 a quintal while those of December futures surged by Rs 14.

The manufacturers predict a situation similar to that of wheat, where the export price was fixed at around Rs 4 to 5 a kg and owing to domestic crisis in wheat production, India was forced to import the same at Rs 11 to Rs 12 a kg during the same year.

"India has imported only once in the last seven years and never has a crisis of this magnitude been witnessed in the maize industry. So, we advocate a ban on exports and abolition of the 15 per cent import duty that is levied for a quota of 4 lakh tonne of import on the actual user basis," said Sheth.

To add to the manufacturers' woes, the government also levies 60 per cent duty on imports above 4 lakh tonne, a policy that is making it almost impossible for most maize-based manufacturers to import.

The association is also proposing the creation of a monitoring agency to review the domestic demand and release quota of exports accordingly.