India’s drive to produce more ethanol is leading its farmers to switch away from growing oilseeds, undermining government efforts in the world’s largest buyer of cooking oils to reduce costly imports.
Helped by record corn and rice harvests, New Delhi is using more of the grains to make ethanol and meet its target of blending 20% of the biofuel additive with gasoline. The process, however, produces Distillers Dried Grains with Solubles (DDGS), a protein-rich byproduct that is flooding the animal feed market.
The DDGS glut is weakening demand for oilmeals, depressing oilseed prices and prompting farmers in the South Asian nation to plant more corn and rice in place of soybeans and groundnuts – despite New Delhi’s push to grow more of the oilseeds to ease imports.
DDGS production in India has soared some 13-fold over the past two years to an estimated 5.5 million tons by 2025, according to industry officials.
“DDGS is a pain in the neck,” said Aashish Acharya, vice president at Patanjali Foods Ltd (PAFO.NS), opens new tab, a leading soybean processor. “Feed makers are substituting oilmeals with DDGS since it is cheaper.”
The shift is visible in government sowing data. As of August 8, oilseed acreage – including soybean and groundnut – was down 4% from last year, while corn area jumped 10.5% to a record high.
Madhukar Londhe, a farmer in Nashik in the western state of Maharashtra, said he had cut his soybean area to one acre from six, planting the rest with corn – which has the added benefit of providing fodder from its stalks for his five milking cows.
Nearly two dozen farmers in the area that Reuters spoke to said they had made a similar switch.
“Soybean prices were too low, so I couldn’t even cover my costs in the past two years. Corn did better for me last year, so I’ve decided to grow more of it,” Londhe said.
