The Commission for Agricultural Costs and Prices (CACP) has suggested that the government allow use of maize for production of ethanol in the country, a move that could help growers fetch better prices.

In its price recommendations for Kharif 2020-21, CACP said major policy changes were required for pricing, procurement and utilisation of maize in the country.

Use of maize for ethanol production will increase demand and ensure remunerative prices and higher income for maize growers, CACP said and cited the example of the US, where corn is the most heavily used feed stock for ethanol production. More than one-third of corn is used to produce ethanol in the US, which has led to higher income income for farmers, it said. CACP believes that maize has a great potential for crop diversification in rice-wheat cropping system areas of north-western plains, where substantial groundwater depletion has occurred. However, maize has low profitability, compared with competing crops such as rice, due to low and fluctuating prices and yield of maize, it said.

Price crash

Maize prices have crashed in the recent months after the Coronavirus scare hit the consumption of poultry products. Modal prices of maize are ruling at around ₹1,300 per quintal across various mandis, lower than the minimum support price (MSP) of ₹1,760 for the 2019-20 season.

CACP has recommended a 5 per cent increase in MSP at ₹1,850 for the 2020-21 season. Poultry accounts for close to two-thirds of the maize produced in the country. Maize production is estimated at 28 million tonnes in 2019-20.

In fact, the National Policy on Biofuels, 2018, has identified corn among the potential feedstock for production of ethanol. Recently, the government has allowed the diversion of surplus rice from FCI stocks for production of ethanol.

Further, CACP said procurement of maize under the Price Support Scheme (PSS) is neither feasible nor desirable as there is no assured mechanism for liquidation of stocks procured by public agencies and drives out private trade.

Therefore, the ‘Price Deficiency Payment Scheme (PDPS)’ and ‘Private Procurement and Stockist Scheme (PPSS)’ should be pro-actively promoted in major producing regions, it felt.

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