Rising diversion of maize to ethanol production has significantly increased poultry feed costs, leading to a 35-40% surge in egg prices over the past year. Maize prices have nearly doubled in three years, impacting the poultry industry which relie...
New Delhi: After driving sugar prices higher, ethanol is now putting pressure on another key food item: eggs. Rising diversion of maize, a key ingredient in poultry feed, to produce ethanol has pushed up feed costs and, in turn, egg prices. Egg prices have increased around 35-40% over the past year, according to data from the National Egg Co-ordination Committee (NECC). Eggs now cost about ₹7 apiece ex-farm. Retail prices range from ₹8.50 to ₹9.00.
Poultry industry executives expect prices to remain firm and potentially rise as winter approaches, when demand for eggs typically increases. "Roughly 37% of the total maize production is now going to ethanol distilleries. In the past one year, egg prices have gone up by nearly 40% and are likely to rise further," a senior NECC official told ET.
The government's ethanol blending mandate requires oil companies to mix petrol with biofuel for sale at fuel pumps. As the ethanol percentage in blended petrol has increased to 20%, diversion of sugarcane and maize for its production has risen, in turn affecting their supplies for sugar manufacturing and feedstock.
Prices up nearly 40% over last year as rising diversion of maize for ethanol production tightens feed supplies Amid the shortage, maize prices have increased to nearly ₹26,500 per tonne from around ₹14,000 three years ago, raising production costs for poultry farmers. Prices have risen by almost 20% in the past five months alone.
"Maize is the biggest cost for poultry farmers, accounting for 65-70% of total poultry production costs. Any sustained rise in maize prices is particularly painful for the industry," the NECC official said.
According to Parliament data, India's total maize production is around 43.4 million tonnes, of which nearly 17 million tonnes are now being used for ethanol production. This has tightened supplies available for poultry feed and other uses.
"Maize and soybean prices have a direct bearing on poultry feed costs, and any sustained increase in feed prices eventually reflects in the cost of producing eggs and chicken," said a senior industry executive. "That said, ethanol demand and diversion is not the sole driver of poultry prices. Factors such as heat stress, mortality levels, weather disruptions and the availability and cost of imported feed ingredients can also significantly influence production costs and market prices," he told ET.
Maize-based ethanol production has expanded sharply, rising from about 1 million tonnes in 2022 to more than 6 million tonnes in 2024 and around 17 million tonnes at present. Experts believe that this will go up to 25 million tonnes by 2030. The poultry industry consumes roughly 60% of the country's maize, putting it in direct competition with the ethanol industry for the same crop.
Demand from the ethanol industry is also changing India's position in the global maize market. India was earlier an exporter of maize to markets such as Bangladesh and Vietnam. However, rising domestic demand from the poultry sector, coupled with increased diversion for ethanol, has reduced the surplus available for exports and, in fact, led to imports, said industry executives.
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