Fuel vs Feed, Ethanol Push Disrupts India's Maize & Soyabean Market Balance

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Agriculture provides food, feed, fibre, and fuel. For example, cotton yields lint (fibre), edible oil from seeds (food), and protein-rich cake (feed).
However, the growing use of crops like maize for fuel is raising concerns among traditional user industries, as it affects the availability and cost of maize for food and feed purposes.

Until 2021–22, India produced 32–33 million tonnes (mt) of maize, against a domestic demand of 28 mt.
Surplus allowed for 3.7 mt in exports.

Maize, rich in starch (68–72%), is now used to produce ethanol for fuel blending.
1 tonne of maize = ~380 litres of ethanol.
Ethanol production from maize:
- 2022–23: 0.8 mt maize → 31.51 crore litres
- 2023–24: 7.5 mt maize → 286.54 crore litres
- 2024–25 (contracted): Projected 12.7 mt maize → 484.35 crore litres

Biofuel demand has disrupted the earlier demand-supply equilibrium.
Livestock feed industry, particularly poultry and cattle feed sectors, is hit hard.

Maize prices have risen from Rs 14,000–15,000 to Rs 24,000–25,000 per tonne over four years.
Main reason: diversion of maize towards ethanol under the blending programme.

After ethanol extraction, the leftover mash is dried to form Distiller’s Dried Grains with Solubles (DDGS).
- DDGS is a by-product of ethanol production, specifically from the fermentation and distillation of starch-rich grains like corn.
DDGS is protein-rich:
- Maize-based DDGS: 28–30% protein
- Rice-based DDGS: Up to 45% protein

Conventional protein feed ingredients include de-oiled cakes (DOC) of soyabean, mustard, cottonseed, groundnut, and rice bran.
- DOC refers to the residue left after oil has been extracted from seeds or grains, typically through mechanical pressing or solvent extraction.
- It’s a byproduct of the oil extraction process and is used as a source of protein and nutrients in animal feed and as an organic fertilizer.
These are more expensive than DDGS:
- Soyabean DOC: ₹31,000–32,000/tonne
- Maize DDGS: ₹16,000–17,000/tonne
- Rice DDGS: ₹18,000–19,000/tonne

Increased DDGS supply offers a cheaper substitute to soyabean DOC (de-oiled cake).
- DOC refers to the residue left after oil has been extracted from seeds or grains, typically through mechanical pressing or solvent extraction.
Livestock feed manufacturers are blending DDGS with soyabean DOC to cut costs.
Result: Soyabean DOC prices down by ~30% in two years.
Soyabean grain prices have dropped to ₹4,300/quintal, below the MSP of ₹4,892.

Maize farmers benefit from rising prices due to ethanol demand (close to or above MSP of ₹2,225/quintal).
Soyabean farmers, however, suffer price declines due to falling demand for soy DOC.

High Maize Dependency in Livestock Feed
- Maize share in feed:
  - Broiler chicken: 55–65%
  - Egg-layer poultry: 50–60%
  - Cattle feed: 15–20%
- Feed industry is under pressure due to rising maize prices and seeks import liberalisation.
Current Import Policy Constraints
- India allows 0.5 million tonnes (mt) of maize imports annually at 15% duty; anything above that attracts 50% duty.
- Genetically Modified (GM) maize imports are prohibited for food and feed use.
- In April–January 2024–25, India imported 0.94 mt:
  - 0.51 mt from Myanmar
  - 0.39 mt from Ukraine
  - Both non-GM sources
Industry’s Proposal: GM Maize for Fuel Use Only
- Industry experts propose importing GM maize solely for ethanol production, not for seed, food, or feed.
- This would address the surge in demand from biofuel production without affecting food/feed safety norms.
Global Trade Implications
- Opening GM maize imports would benefit top exporters:
  - US, Brazil, and Argentina (major GM maize growers)
- The US is actively seeking new buyers after China scaled down imports.
Balancing Act: A Domestic Production Push
- Experts suggest increasing domestic maize production by:
  - Boosting yields
  - Diverting acreage from rice, which is water-intensive and already in surplus
- A “win-win” strategy would ensure maize expansion does not hurt soyabean or cotton farmers.