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Informist, Friday, May 8, 2026

 

By Pallavi Singhal

 

NEW DELHI – India's maize production may decline sharply in the crop year 2026-27 (Jul-Jun) as weak prices and uncertainty over the government's ethanol policy prompt farmers to shift acreage back to oilseeds and pulses while the risk of an El Nino weather event adds to concern over yields, according to traders and industry experts.

 

Most market participants estimate that maize output could decline by 10-15% if deficient rainfall and lower fertiliser availability coincide during the crop cycle, potentially forcing India to import maize or ethanol to sustain its 20% blending target. "The acreage will fall," said the head of commodities trading and risk management at a large conglomerate. "Last year, a lot of soybean acreage shifted to maize because of ethanol demand. This year, especially because of strong oilseed prices, some of that area will move back to beans."

 

The executive estimated that maize output could decline anywhere from 3 million tonnes to 4 million tonnes even if the weather conditions were normal. If El Nino conditions intensify, production could suffer an additional hit of 2-3 million tonnes, the person said. If that happens, the shortfall will mark a sharp shift in maize production after three years of rapid growth, driven largely by the government's ethanol blending programme.

 

The India Meteorological Department has forecast below-normal southwest monsoon rainfall in 2026 at around 92% of the long-period average, the first such forecast in three years, amid rising chances of an El Nino weather pattern developing during the second half of the monsoon season. El Nino is characterised by warming sea surface temperatures in the equatorial Pacific Ocean and is typically associated with weaker monsoon rainfall and higher temperatures in India. The World Meteorological Organization has said El Nino conditions could emerge as early as May-Jul and intensify later in the year, raising the risk of heatwaves, moisture stress, and lower reservoir levels.

 

India had aggressively promoted maize cultivation after calling for a sharp increase in production in 2023 to meet rising demand from ethanol distilleries and the poultry sector. Farmers responded by rapidly expanding acreage, lifting maize production to around 43.4 million tonnes in 2024-25. Production in 2025-26 is projected to reach nearly 50 million tonnes. The crop became a preferred alternative in several states as farmers moved away from less remunerative crops. In Madhya Pradesh, now India's largest maize-producing state, farmers shifted from soybean cultivation after repeated losses due to disease, waterlogging, and low prices. The ethanol programme gave a boost to maize and sugarcane prices while soybean yields tapered off and prices remained below the minimum support price.

 

The rapid growth in maize cultivation was supported by strong industrial demand. In India, poultry feed accounts for around 44% of maize consumption, followed by bioethanol production at 18%, food processing at 15%, the starch industry at 12%, and other animal feed uses at 11%.

 

However, after two years of expansion, the economics of maize cultivation has begun to weaken. Despite maize-based ethanol fetching around INR 71.86 per litre from oil marketing companies--the highest procurement price among all ethanol feedstocks--physical market prices for maize have declined sharply as supply has increased.

 

"Maize is selling dirt cheap right now, but ethanol prices from maize are the highest. There is no parity," said agriculture economist Deepak Pareek. "We have too much maize at the moment." Maize prices in key wholesale markets have been hovering around INR 1,700-INR 1,800 per 100 kg, way below the minimum support price of INR 2,400 per 100 kg.

 

Analysts said a sustained rise in maize prices is unlikely in the near term because ethanol demand is unlikely to change. "Yes, prices have risen due to the draft policy release by the transport ministry which mentions flex fuel vehicles which would require 85% to 100% blends, but I do not see them sustaining," said Pareek.

 

"For a substantial rise to come, first the cars need to be sold in bulk, infrastructure for supplying such blends needs to be made, pumps have to be built. All this cannot happen now when government is not even clear of the next ethanol blend policy." he said.
 

Market participants said the recent easing of restrictions on rice use for ethanol production has further hurt farmer confidence. "Farmers adopted maize because of ethanol demand over the last 2-3 years, but now the government seems to prefer rice because of surplus stocks with the Food Corp. of India," the conglomerate executive said.

 

India has eased regulations on using surplus rice for ethanol production in the ethanol supply year 2025-26 (Nov-Oct), driven by a bumper harvest and record-high FCI stockpiles. For 2024-25, the government had allowed the use of 2.4 million tonnes of rice, later raising the limit to 5.2 million tonnes to meet demand. For 2025-26, it has again allocated 5.2 million tonnes of rice for ethanol production.

 

Analysts said the policy inconsistency is now prompting farmers to reconsider sowing decisions ahead of the kharif season, especially as oilseed prices remain attractive. "Farmers are likely to shift acreage to pulses and oilseeds this year because maize prices have become unremunerative," Sumit Gupta, chief executive officer of Waseda Global, an international commodities trading firm, said. Moreover, usually during El Nino years, maize production falls 8-10%, Gupta added. "I see a fall across major states, including Madhya Pradesh, Karnataka, Maharashtra, and Rajasthan."

 

Gupta expects maize prices to rise sharply if output declines materially. Ukraine is likely to remain the preferred origin for imports if India needs overseas supplies as it has non-genetically modified corn, he said.

 

Pareek said the production risks may intensify because of concerns about fertiliser supplies amid the geopolitical crisis in West Asia. "With El Nino and fertiliser supply looking like a problem because of the West Asia conflict, I see at least a 10-15% hit on production," Pareek said. "We may be forced to import maize or ethanol next year to manage E20 blending."

 

India achieved its target of 20% ethanol blending in petrol five years ahead of the original 2030 deadline, sharply increasing the strategic importance of maize in the fuel economy. The prospect of tighter domestic supplies comes at a time when India is negotiating a bilateral trade agreement with the US, one of the world's largest maize producers.

 

The US produces 380-430 million tonnes of maize annually, with average yields of around 11 tonnes per hectare, significantly higher than India's productivity level, which averages about 4 tonnes per hectare. But most of the corn grown in the US is genetically modified and India is currently opposed to the import of genetically modified food grain.

 

While most market participants expect maize acreage and production to decline, G.K. Sood, chairman, MEIR Commodities, remains an outlier. According to him, maize may continue to retain acreage because the crop still offers better profitability than many competing crops and requires less water, making it more attractive in a year in which the monsoon may be deficient.

 

"Cost of production is around INR 1,500 per 100 kg, while farmers are getting around INR 1,800 per 100 kg. That is still a 20% profit, so why would they give it up?" he said. "If El Nino comes, maize requires lesser water, which may encourage farmers to plant more maize."

 

Sood estimated India's maize production at around 50 million tonnes in crop years 2025-26 and 2026-27, though he acknowledged that the rabi crop in the latter could suffer if reservoir levels weaken after the monsoon. "The worst impact of El Nino generally comes between September and January," he said. "Rabi crops are irrigated crops. Initial moisture will be lower and reservoirs will not be very comfortable after kharif. Gains in kharif may get lost in rabi."

 

Meanwhile, policymakers continue to push maize cultivation as part of crop diversification efforts in water-stressed states. Earlier this month, the Punjab government announced it would expand its kharif maize cultivation scheme to 16 districts in 2026-27 from six earlier, offering incentives of INR 17,500 per hectare to encourage farmers to move away from water-intensive paddy cultivation.

 

Still, analysts said the sector is entering a more uncertain phase after years of extraordinary growth, with weather risks, shifting crop economics, and policy ambiguity threatening to slow India's maize boom.  End

 

Edited by Rajeev Pai

 

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