Business Daily from THE HINDU group of publications
Tuesday, Jan 30, 2007
ePaper
Business Daily from THE HINDU group of publications Tuesday, Jan 30, 2007 ePaper |
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Agri-Biz & Commodities
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Foodgrains Industry & Economy - Exports & Imports Govt playing safe on maize imports G. Chandrashekhar
The commodity was under a tariff rate of quota of five lakh tonnes at 15 per cent duty and at 50 per cent duty on imports exceeding the quota. Domestic maize users - mainly producers of poultry/animal feed and starch - have been actively campaigning for duty-free imports on the grounds that domestic supplies had tightened and that the market had firmed up considerably. Despite duty waiver, imports may not be feasible because of strong overseas prices. Large-scale diversion of corn in the US, the world's largest producer and exporter, for bio-ethanol production has reduced the available export surplus, resulting in firm prices. Strong feed demand from China has pushed the global market further northward. The corn futures contract continues to be the strongest performer on the Chicago Board of Trade (CBoT), suggesting strong fundamental support. Recently, there was a further large addition of long positions by non-commercials to an already large long on the bourse. Little wonder that from a year-ago level of about $2.05 a bushel, corn prices have doubled on the CBoT. The possibility of large imports into the country in the immediate future is remote. Thankfully, the Government has not banned export of maize. So far, an estimated quantity of 1.5 lakh tonnes has been shipped out. Very firm export prices in major origins have made Indian prices look reasonable. But a matter of curiosity and interest is the Finance Ministry's decision to waive duty on maize imports till the end of the 2007 calendar. It is unclear what prompted the decision as it completely ignores seasonal factors and future production possibilities. While the rabi (summer) crop is getting ready to reach the market - the crop size is small - the next major harvest of domestic maize crop will be in in September during kharif. The decision to allow duty-free imports till the end of the year strongly suggests that the Finance Ministry is not hopeful of a bumper crop or is convinced that the next maize harvest will not be large enough to meet domestic needs and there would be shortage. Although improbable, it is not impossible that the Finance Ministry's assessment may be proved wrong. Though fluctuating, India's maize production has been on an upward path in recent years, according to Government statistics. From 111.5 lakh tonnes (lt) in the drought-hit year of 2002-03, output expanded to 149.8 lt the following year, only to dip to 141.8 lt in 2004-05. In 2005-06, maize production was a record 150.9 lt. Without doubt, demand has been expanding rapidly. Robust expansion of poultry and animal feed industries has given a new fillip to demand, in addition to industrial uses such as starch production. Maize is an important coarse cereal for the country and accounts for almost half of the total coarse cereals output, including jowar, bajra, barley and small millets. Yields are low and provide scope for improvement. There is tremendous opportunity to raise both productivity and production. It is absolutely essential that user industries engage themselves in ensuring captive production of their raw material. They seem to be relying on the easy option of imports or expect that the Government should provide them with raw material. Surely, it is no part of the Government's duty to do so. The Ministry of Agriculture has the onerous responsibility to take steps to raise production of maize. It should also encourage the user industry to establish backward linkages.
More Stories on : Foodgrains | Exports & Imports | Excise and Customs | Poultry
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