Maize starch prices may go up as corn price shoots up 25%

A hike in maize starch is round the corner following a 25 per cent rise in maize prices this year.

Despite being the peak season for maize, the rise in the price comes on the back of huge demand from poultries for maize as a feed. Poultries feel maize is affordable even at higher prices as a feed compared to other options.

The members of the All India Starch Manufacturers Association (AISMA) had recently held a meeting to discuss the high prices of maize and their impact on the industry. They are expected to meet again between December 16 and 20 to review the situation and take a decision on the price hike.

"Even after the arrival of the new crop, the price of maize remains abnormally high and is about 25 per cent higher than what it was at this time last year. Normally at this time of the year the price of maize is lower than that in September. But a lot of fluctuation in price is being observed this time," said Nandini Purandare, secretary, AISMA.

Last year the price of maize stood between Rs 440 and Rs 450 per quintal at this time of the year, which translates into a kg of maize being available at around Rs 4.50.

However, this year the price of maize has shot up to between Rs 575 and Rs 585 per metric tonne, a hike that starch manufacturers are worried about.

"The poultry industry will be willing to pay as much as Rs 10 a kg for maize, as it is still affordable for the them. But the maize starch industry will not be able to cushion a price hike. What we need is a level playing field, so that interests of all are safeguarded," said Kaushik Khona, chief financial officer, Gujarat Ambuja Exports.

He added that the government must also consider abolishing the import duty on maize, in a bid to help the industry afford imported maize.

"There has not been a bumper crop of maize this year. While there has been adequate rainfall in some parts of the country, there has been a shortage elsewhere. But the poultry industry absorbing higher share of the maize production is also affecting the price hike," said Nalin Thakur, vice-president, operations, Anil Products.

Thakur stated that maize starch manufacturers will be forced to pass on some of the increased cost to consumers.

"Starch manufacturers will absorb some of the expenses, but I think there is bound to be a hike in the cost of maize starch. Prices of maize starch stood at around Rs 10,500 per metric tonne a year ago, and this is expected to climb up to around Rs 11,000 now.

In India, the prime source was deriving starch has been maize. The other sources of starch like tapioca, potato, bajra, barley and the like have not been significant enough.

After remaining dependent heavily on the textile industry for their growth, maize starch manufacturers have for the past decade or so explored better and new avenues for application of maize starch.

Of late, the pharmaceutical sector, food processing industry, beverages, paper, printing inks, fireworks, building materials and leather industry have been recipients of maize starch.

But simultaneously the demand for maize as a poultry feed has also increased tremendously over the years and the poultry feed industry has been procuring maize in huge quantities, even at higher prices.

AISMA has warned that if the availability of maize is not kept at affordable prices and if import duty continues on maize (it is at present at 10 per cent), then the prices of starch, liquid glucose, dextrose monohydrate, anhydrous dextrose and other maize products are likely to shot up.