Impact of Ethanol Production on Maize

Context

The rise in ethanol production in India, primarily from maize, is creating significant changes in agriculture, especially affecting the supply and pricing of maize. The push for cleaner fuels has led to the diversion of maize from traditional uses like livestock feed to biofuel production.

About Maize (Corn)

Maize is used for multiple purposes: as a food crop, livestock feed, and for industrial purposes like ethanol production.
Production and Demand:
- India's Maize Production: India produces approximately 32-33 million tonnes (mt) of maize annually.
- Domestic Demand: The domestic demand for maize is around 28 million tonnes.
- Surplus: Before ethanol production surged, there was usually a surplus, with exports reaching 7 mt in 2021-22.
Key States: Uttar Pradesh, Punjab, Madhya Pradesh, Haryana, and Bihar.
Shift in Use: The demand for maize has surged due to its use in ethanol production. Ethanol, a biofuel, is made by fermenting maize grains, which contain starch, a primary source of energy. This shift has significantly altered the demand-supply balance for maize in India.
Impact of Ethanol Diversion:
- In 2023-24, 5 mt of maize was diverted for ethanol production, significantly reducing the amount available for other uses, particularly livestock feed.
- The government's ethanol-blended petrol program has led to maize prices increasing from Rs 14,000-15,000 per tonne to Rs 24,000-25,000 per tonne.
Byproducts and Impact on Livestock Feed: The process of producing ethanol from maize also generates a byproduct known as DDGS (Distiller's Dried Grains with Solubles), which is a protein-rich feed for livestock, further affecting the demand for traditional protein sources like soybean.
- DDGS from maize contains 28-30% protein, making it a cost-effective alternative to soybean de-oiled cake (DOC), which is more expensive.