Infestation of the fall armyworm, which destroyed African crops in 2017 and below-normal monsoon rainfall have cut India's corn production and boosted prices, increasing the chances the Centre will grant duty-free corn imports for the first time since 2016.
The shift to imports in the world's seventh-largest corn producer that usually exports to Asia, underlines the span of the crop losses because of the drought and fall armyworm. This also shows the probable harm that the armyworm could have on India's agricultural economy that supports almost half of India's 1.3 billion people.
India basically reaps two sets of corn crops in a year – a winter crop from March and a summer crop that starts from September. According to the data from the Ministry of Agriculture and Farmers' Welfare, India harvested 20.24 million tonnes for the summer crop in 2017-18 crop year that will end in June.
But, between the lower-than-normal monsoon rain and the armyworm invasion, summer crop yield for 2018-19 is estimated to fall below 16 million tonnes, according to a senior research analyst at commodity brokerage SMC Comtrade Ltd in New Delhi, Subhranil Dey.
“The weather was not good and there was the pest infestation too,” said Mr. Subhranil adding that Centre will have to allow imports. He said, “Imports will help in bringing down the prices. But the Centre may not permit huge imports. It will allow them carefully in a phased manner.”
As per the data from the Ministry of Agriculture and Farmers' Welfare, India harvested 8.47 million tonnes of winter corn last year, but the sown area this year shrank 11 % for the winter crop.
Consequently, corn prices in Maharashtra have increased by more than 30 % in the past two months to a record of about Rs 20,000 / tonne and this is up from Rs 13,000 a year back.
Poultry producers and corn starch manufacturers are optimistic that the shipments will rein in the price hike that they are struggling to pass on to customers. Prasanna Pedgaonkar, general manager at Venky's, (India's biggest poultry producer) said, “We are seeking duty free imports of at least 500,000 tonnes. Our output cost has gone up because of the leap in corn prices”.
Corn-based feed generally makes up 2/3rd of poultry production costs. Imports should overcome two hurdles - first, the Centre should agree to lift a 60 % import tax and second, imports ought to be non-genetically modified (GM) strains as New Delhi does not allow the cultivation or import of GM crops.
The Centre has allowed duty-free imports as recently as 2016, when 181,000 tonnes had been imported. Nevertheless, few nations export non-GM corn in huge quantities, so finding enough GM-free supplies would be a challenge for the traders, said South Asia Representative for the US Grains Council, Amit Sachdev.
Centre has not decided on petitions received from importers to allow duty-free imports, told a federal government officer. The government can also delay imports till the upcoming general elections in May to boost the ruling party's status with farmers, told a Mumbai-based merchant. He said, “Allowing imports just prior to elections may send a negative message to the farmers”.
