Corn prices rise 70% in seven months

A rise in corn prices on the international market has sent maize to an all-time high in Bangladesh’s local market, hitting the poultry and fish feed industry hard.

Stakeholders said that corn prices increased 70 per cent on the local market over the last seven months, riding on reasons including a fall in production, freight fare hike, and Russia’s Ukraine invasion.

“We have to depend on the international market since our production is low. Rising (corn) prices on the international market has made our local market volatile,” Bangladesh Wheat and Maize Research Institute’s Director General Golam Faruq told The Business Post.

According to the Department of Agricultural Extension, Bangladesh produced 5.65 million metric tonnes of maize in the last fiscal year against an annual demand of seven million tonnes. A sizeable portion of the demand is met through imports from countries including Brazil, China, Argentina, India, Russia and Ukraine.

Bangladesh’s poultry, fish and livestock feed industries use nearly 90 per cent of the local demand. The corn price hike has forced producers to cut production and raise prices, creating a rippling effect throughout the fish and meat sector.

Corn and soybeans have been around their highest since September 2012. Each ton of corn sold for $295 on the international market, up from $277.13 in January this year, according to data portal Index Mundi. In August last year, a ton cost $257.15. Traders said the corn season, beginning in around three weeks, would not affect the prices.

Poultry, fish feed sector hit hard

Maize is the primary ingredient in fish and poultry feed. The rising prices have indirectly affected the fish, meat and egg markets, creating pressure on the general people. Industry insiders said the sector needs around four million tonnes of corn a year and nearly 1.5 million tonnes have to be imported.

Feed Industries Association Bangladesh’s (FIAB) General Secretary Md Ahsanuzzaman said the rising maize prices forced them to hike feed prices. “We have to raise the prices further if we want to adjust the production cost. This could potentially force some producers to shut business,” he said.

Ashanuzzaman said large factories had cut production by around 15 per cent while the smaller ones had kept their operations shut.

Rising prices, falling production

Until 2020, corn’s maximum price was Tk 22 a kg on the local market and fluctuated by around Tk 4 over the months. In August last year, it jumped by 60 per cent to Tk 32. Russia’s invasion of Ukraine pushed up the price by around Tk 4 a kg. This means corn rose 70 per cent in seven months.

Maize cultivation has fallen slightly this year with farmers cultivating the crop on 5,33,000 hectares against a target of 5,75,000 hectares.

Khandaker Mohsin, general secretary of Bangladesh Poultry Farm Protection National Council, said there was a supply crunch and the available corn on the market was of low quality.

“Rising ingredient price pushes up production cost, which in turn, affected the feed producers as well as the general consumers,” Bangladesh Dairy Farmers Association’s President Mohammad Imran Hossain said.

No sign of calm

FIAB President Ehtesham B Shahjahan told The Business Post that the local maize stock had been depleted and supplies from the import destinations had fallen for various reasons, including the pandemic, pushing up prices on the international market. Wheat prices jumped 37 per cent and corn soared 21 per cent so far this year after rising more than 20 per cent in 2021. Ukraine’s invasion has sparked concerns over food security. 

Supply chain disruptions have pushed grain prices to multi-year highs and the supply risk for corn is feared to run into the next season as well, meaning prices will continue to remain high and volatile. This will further affect the local feed market and push up fish and meat prices.

“Import cost had shot up on rising fuel prices and freight fares. The Russian invasion of Ukraine triggered a tide of price hikes and many countries, including India, raised corn prices,” Shahjahan said.

“Many local traders have stopped buying maize as the prices keep rising. This has created a supply crunch on the international and local markets.”

Feed, meat prices to go up further

Animal feed prices rose by 38 per cent or Tk 16 a kg over the last year, riding on increasing prices of maize and other ingredients. Over the previous six months, the prices jumped 21 per cent or Tk 10 a kg, which rose by another Tk 2.8 on Ukraine war. Feed producers have hinted at raising the prices within the next week.

A kg broiler feed currently costs Tk 58, up from Tk 42 in March last year.

Bangladesh Dairy Farmers’ Association said the prices increased 20 per cent in the last three months, affecting the dairy, fish, eggs and meat market.

Broiler chicken prices soared to Tk 155-160 a kg compared to Tk 115-125 in August last year. During this period, beef prices rose by Tk 50 a kg to Tk 650 and powder milk prices rose by Tk 30 a kg to Tk 690. The price of four pieces of eggs increased by Tk 5 over the last six months, according to the Trading Corporation of Bangladesh.