Maize price rise hits starch units

The price of maize has shot up by around 25 per cent this year and maize starch manufacturers are considering the option of hiking maize starch prices to meet expenses.

This is the peak season for maize and prices are generally low at this time as huge quantities of grain arrive at markets.

Traders said maize prices were high this year as poultries were expected to buy large quantities of maize as poultry feed as the price in India was still below the price of other poultry feeds.

Maize was also healthier and enjoyed greater consumer acceptance, they claimed. Members of the All India Starch Manufacturers Association (AISMA) recently met to discuss the high prices of maize and its impact on the starch industry.

They are expected to meet again between December 16 and 20 to review the situation and decide on hiking prices of maize starch.

"Even after the arrival of the new crop, the price of maize is about 25 per cent higher than what it was at this time last year. Normally, price of maize in November-December is lower than the price of maize in September, but a lot of fluctuation is being seen this time," said Nandini Purandare, secretary, AISMA. This time last year, maize stood at between Rs 440 and 450 per quintal.

This year, maize is at Rs 575-585 per metric tonne.

Worried starch manufacturers said they could not absorb this rise in raw material cost.

The maize crop this year was was not too big. There was adequate rainfall in some maize growing areas but others saw a water shortage.

The poultry industry was buying more maize, thus pushing up prices, said Nalin Thakur, vice president, operations, of Anil Products Limited.

Thakur said maize starch manufacturers would pass on some of the increased cost to consumers.

"Starch manufacturers will absorb some of the cost , but I think there is bound to be a hike in the cost of maize starch", he said.

Prices of maize starch would rise from around Rs 10,500 per metric tonne a year ago to around Rs 11,000 this year.

In India, the prime source of starch was maize. Other sources of starch like tapioca, potato, bajra and barley were hardly used in the country.

The textile industry was for long the largest buyer of maize starch in India.

In the last few years, new users like the pharmaceutical sector, food processing industry, and producers of beverages, paper, printing inks, fireworks, building materials and leather, had started buying maize starch.

But simultaneously, the demand for maize as a poultry feed had shot up.

The poultry feed industry was procuring maize in huge quantitiesat higher prices, pushing maize starch manufacturers to the wall.

AISMA said if maize prices rose and the import duty of 10 per cent was retained, the prices of starch, liquid glucose, dextrose monohydrate, anhydrous dextrose and other maize products would shoot up.