Maize Prices moving up, no respite in sight; Retail boom in the offing, but are chicken suppliers ready?

Maize Prices moving up, no respite in sight

Price of maize in India moved up yet again this week by another 4% over last week, closing at an average of about Rs.6900 per MT at the market yard. The delivered price on an average would be close to Rs.8300 – 8500 range per MT. Over the last year the prices are higher by 23% at the market yard levels.

Sorghum (Jowar) prices at the market yard have also reached a level of Rs.8300 per MT and up by approximately 11% over last week. Against maize, the prices are higher by approximately 20%.

Pearl Millet (Bajra) prices have also shot up and are at Rs.7600 per MT at the market yard, higher by 2.5% over last week. Against maize the prices are higher by approximately 10%.

Average price of barley was down this week by 11% over last week, levelling at RS.7900 per MT at the market yard. The prices are also lower than last year by 5.6%.

The situation on coarse grains looks very bleak, with demand going up and supplies dwindling fast. Government of India has extended duty free status for pulses import until July 31, 2007, as there is a need for pulses and this has also been done to curb inflation. If GOI does allow imports of maize at NIL duty, it may not be possible to reduce the cost of production of eggs, broilers or starch on a short term basis, but it will certainly enhance the availability of maize and any increase in prices will eventually be reflected in the inflation. At this point, the big question not the price but availability of the commodity to run the plants and feed the broilers and layers and have a sustainable employment generation in these sectors.

The world demand for corn will be rising in near future and in the current scenario Australia will also be in the market to buy corn from US. As Australian authorities complete the pest risk analysis from US, imports to Australia may start as soon as next month.

Prices of corn on CBOT were slightly down over last week. Dec corn closed at $139.33 per MT, down by almost $7.87 per MT over last week’s close.

Retail boom in the offing, but are chicken suppliers ready?

The retail boom in India is about to happen, with Reliance Retail, Bharti-Walmart, Subhiksha etc entering the fray and Metro expanding its wings. In addition to the retail boom, the growth of the fast food chains, KFC, Pizzahut, McDonalds also would happen.

With McDonalds at 100 stores at the moment, KFC with few joints (2 in Delhi and some other locations) and Pizzahut and many more to come, the next question to ask, are our chicken and value added product suppliers ready to serve the outlets, retail or fast food chains with a consistent good quality product?.

As one moves ahead, the processing plants in India are small and regional, may not be able to cover whole of the country. There is a need for operators to expand their operations, and the buyers to work very closely with the processors/suppliers to plan standards for the products and supply chain, which is a vital tool in the present scenario.

If there is no plan, the growth may not be proper and with supply as a bottleneck, the growth of the retail chains as well as the fast food restaurants may be hampered. In this case GOI’s intervention may be required only to form rules and regulations for quality certification (ISO & HACCP), but it would be the responsibility of the trade (Buyers and suppliers) to formulate a strategy which will be mutually beneficial to all, the processors, retailer/users and the consumer.

Amit Sachdev
Representative
U S Grains Council, India
bluecross303@gmail.com

Dec 9, 2006