Starch manufacturers cut production by 20%

Domestic maize-based starch manufacturers have cut production by 20 per cent to ensure better realisation for their products in the wake of increasing input cost.

"Members of the Indian Starch Manufacturers' Association have opted for a 20 per cent cut in production, effective February 15, and the cut may continue till March 15," said a senior official of the association.

Starch manufacturers are likely to meet in early March to review the situation. The cut in production is applicable to plain starch and liquid glucose. Starch of pharma and specified textile grades is kept out of the production cut.

Rising maize prices had hit starch producers. The fall in prices of tapioca, which some starch makers tapped, made it difficult for maize-based starch manufacturers to pass on the high input cost to customers.

The tapioca season was coming to an end and, hence, the decision to cut production would result in better realisation, said Amol Sheth, managing director, Anil Starch, and leading Gujarat-based starch producer.

The basic price of maize starch, which was ruling around Rs 875 to Rs 900 last December, is currently at Rs 800-825 for a bag of 50 kg. Starch makers expect the prices to rise to Rs 875 in the coming weeks. Liquid glucose, which was quoted at Rs.18.50-19 a kg (basic price) in December, has now fallen to Rs 17.50-18.

The demand for liquid glucose, which is used in confectionery, was weak owing to winter. The production cut and an expected improvement in demand are set to push prices up. Sheth expects maize prices, which are about Rs 760 in Nizamabad, to remain around the level or fall, with the rabi crop set to arrive in the mandis from the next month.

According to the agriculture ministry data, the area under maize cultivation has increased from 9.948 lakh hectare in 2005-06 to 11.134 lakh hectare this year.