GOI removes duty on maize Imports; Growth of Poultry in India

GOI removes duty on maize Imports

As a Republic Day gift to the maize users of India, starch, poultry and livestock, GOI abolished the duty on maize imports into India. Reports available indicate that the maize imports are allowed under zero duty with immediate effect and will be allowed until Dec 31, 2007.

The duty free imports will certainly help in bridging the gap between demand and supply. Though the parity of imports may not be there, sentiments will rule for the next few months in bringing the prices down. The imports are most likely to take place in May - September 2007, which is when the prices will be highest as there is no production during the period. The new crop would be available only in October 2007.

Prices of maize in the market yard touched a new high this week notched up to Rs.7300 – 7400 per MT range. The delivered prices averaged Rs.9100 – 9300 per MT ($206 per MT). The current prices are higher than last year prices by approximately 19%. The futures at NCDEX were also high, Feb Rs.7730; Mar Rs.7880; April Rs.8030; May Rs.8150. The prices are at delivery centres and cost of loading-unloading, transport will need to be added.

Prices on CBOT are similar to last week’s close at $160 per MT. The indicative FOB values for corn out of US Gulf are Feb $173; Mar $175; April $178; May $179 (All prices of per ton basis).

With a boom in the Chinese economy, which grew at 10.7% in 2006, the demand for maize as a basic ingredient for food and feed will be much higher. Reports available indicate that China’s maize demand will outshoot its supply by 4.8 MMT by 2010.

Sorghum (Jowar) prices dipped little (4.8%) over last week to Rs.8300-8400 per MT range at the market yard. The prices are still higher than maize by about 14%. The Sorghum prices are higher than last year’s prices by 21%.

Pearl Millet (Bajra) prices also dipped by 4% reaching a level of Rs.6800 – 6900 per MT, which is about 6.7% lower than maize prices. The prices are lower than last year by 9%.

Barley prices were down over last week by 11% to Rs.7800 – 7900 per MT. The prices are lower than last years prices by 12%. The futures trade of barley on NCDEX was March Rs.8210; April Rs.7500; May Rs.7630; Jun Rs.7840. All prices are on per ton basis.

Growth of Poultry in India

The Indian poultry industry has almost doubled in 6 years. In 2000, the broiler placement in India was 876 million, with the per capita consumption at 0.876 kg. In 2006 the estimated broiler placement for the year is likely to be 1711 million with the per capita consumption slated at 1.76 kg, which is exactly double. The big question though is will be double in the next 6 years?

In 2012 if all goes well and there are no surprises, the broiler placement is projected to reach 2715 million, adding 58.6% in 6 years, with the per capita consumption at 2.52 kg. The average growth would be 9.76% per year.

The first 6 years of 21st century saw a great jump, but it seems that the Indian poultry sector will not be able to sustain that growth, unless the sector changes the way business is conducted. One of the primary reasons attributed to the uneven growth is the stagnation of the live markets. The live markets though can take more birds, but will not grow fast enough than the processed market and will tend to pull the market down.

Another factor which effects the growth in broiler sector is the price of live birds which is controlled by traders rather than the market. The investment in production facilities as new or expansion would not take place unless farmers receive a fair price which is possible under contract growing. Lessons need to be learnt from countries where poultry farmers have benefited from adopting integrated poultry farming system completely, wherein farmers are linked to the market (processor) and the middle men/traders can be eliminated.

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

Jan 27, 2007