The critical question is whether this spike in imports is a temporary occurrence, or indicative of a more profound structural shift in the maize market.
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Maize is rapidly becoming a key crop in India, driven by rising demand across poultry and cattle feed, starch production, potable alcohol manufacturing, and ethanol for fuel blending. Currently, maize is trading at around Rs 23 per kg, surpassing the minimum support price (MSP) of Rs 20.9/kg.
This reflects a 20 per cent increase compared to last year’s price of Rs 19.4/kg. Interestingly, while domestic maize prices are rising, global prices remain low. Myanmar’s non-GMO maize, allowed duty-free, lands at Rs 26.8/kg in South Indian warehouses, compared to around Rs 30/kg for Indian maize in the same locations. This price gap has led to a surge in Indian maize imports, reaching 0.54 million metric tonnes (MMTs) during the marketing year (MY) 2023-2024 (October to June) — the highest import level since 2000.
The critical question is whether this spike in imports is a temporary occurrence, or indicative of a more profound structural shift in the maize market.
Indian maize balance sheet
India produces and consumes ~36-37 MMTs of maize annually (2023). The largest consumer is the fast-growing feed industry, which absorbs about 60 per cent of the total — 47 per cent (17 MMTs) to poultry feed, and 13 per cent (5 MMTs) to cattle feed. The starch industry consumes about 14 per cent (5 MMTs), and this starch is used in sectors like baking, pharmaceuticals, textiles, and paper. The food processing industry takes about 7 per cent (2.5 MMTs), and another ~5 MMTs is consumed as food. India maintains a stock of ~1 MMTs between years.
Indian maize exports were largely a residue. An analysis of prices since 2000 shows that Indian maize is usually in the non-tradeable zone compared to its global prices, when adjusted for quality and freight. Till 2019-2020, India, on average, exported 0.5-1.2 MMTs annually. However, since 2020-2021, these exports jumped up to about 3-4 MMTs annually. In 2022-2023, about 0.8 MMTs of maize was also diverted towards ethanol-for-fuel blending purposes.
Poor monsoon pressures
Last year was an El Niño year, which typically causes the Pacific Ocean to warm, leading to weaker monsoons in India. In 2023, the monsoon rains were 6 per cent below normal, and since 45 per cent of India’s cropped area depends on rainfall, several crops, including maize, were adversely affected. Maize production fell by about 2.5 MMTs to 35.67 MMTs in 2023-2024 from 38.09 MMTs in 2022-2023. Other crops that saw a decline were sugarcane (10 per cent), cotton (3 per cent), urad (13 per cent), soybean (13 per cent), and moong (21 per cent).
At the same time, the government’s E20 mandate — which targets 20 per cent ethanol blending with fuel — continues. But the poor monsoon affected the availability of key feedstock crops like sugarcane and maize. As sugarcane was prioritised for food/sugar production, maize took on a larger role in ethanol production. The government incentivised maize-based ethanol by raising its price, which increased its demand.
Consequently, about 5.5 MMTs of maize is expected to be diverted toward ethanol production during the ongoing 2023-2024 ethanol supply year (ESY). This has tightened the maize supply, driving up prices and forcing industries like poultry feed and starch production to turn to global markets, likely resulting in maize imports of ~1 MMT during the current crop year.
Crop diversification
For farmers, the rising maize prices, are a cause for celebration. Maize requires lesser irrigation than rice while providing comparable fodder, making it an attractive alternative. The Centre, along with several states, has been encouraging farmers to shift from rice to maize during the kharif season. Thanks to the growing demand, recently triggered by distilleries for producing ethanol from the crop, maize prices have continued to rise, even during the rabi harvest months (March to June) for most times prices stayed above the MSP (Figure 1).
Maize outlook
In 2024, the average maize farmer earned an additional Rs 450 per quintal in August, and about Rs 200 more per quintal for the year compared to 2023. Encouraged by these higher profits, farmers expanded maize acreage during the kharif season. As of August 30, maize acreage had increased by 5.3 per cent compared to the same period last year. This change also supports the government's efforts to diversify crops, and build climate resilience. If India meets its target of cultivating 8.9 million hectares under maize this year, then with yields remaining consistent with 2022-2023 (when rains were normal), India could possibly produce an additional 4 MMTs of maize during the kharif season alone.
With favourable monsoon rains leading to better soil moisture, the rabi maize crop is also expected to surpass last year's production of 13.3 MMTs. For the entire 2024-2025 crop year, total acreage is projected to rise to 11.5 million hectares, with an expected yield of 3.5 tonnes per hectare, potentially resulting in at least 40 MMTs of maize output. This increased production, ceteris paribus, would significantly ease the tight balance sheet for maize in India.
May not be a structural change
From a research perspective, Indian agricultural exports, including maize, have generally been residual, meaning they are secondary to domestic consumption. With rising domestic demand, exports are expected to remain limited in the future.
While imports helped balance the maize supply in 2023-2024, the outlook for the upcoming year looks strong. The projected increase in production should support the growing domestic needs. The key challenge going forward will be improving crop yields. Currently, about 55-60 per cent of India's maize area is under single-cross hybrid seeds, which yield around 5 tonnes per hectare compared to the overall national average yield of 3.3 to 3.5 tonnes per hectare. This area, as per ICAR-Maize, can easily reach 90 per cent of the cropped area. Under its Rashtriya Krishi Vikas Yojana, the government is promoting 25 clusters to encourage high-yielding variety (HYV) adoption. If the area under HYV seeds is expanded, India could easily boost maize production by an additional 5-7 MMTs annually.
Furthermore, maize is more climate-resilient and requires less water than rice, its main kharif counterpart. As a result, many state governments are actively promoting the expansion of maize cultivation. With increased acreage and higher yields, India’s maize production can grow to not only help the country become self-sufficient but also help the crop thrive.
(Shweta Saini is an Agricultural Economist and CEO, Arcus Policy Research, New Delhi.)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.