INTERVIEW: India feed sector seeks safeguards ahead of ethanol blending raise

India should introduce market-based safeguards for corn and improve grain production before raising ethanol blending beyond E20, as growing fuel demand risks tightening supplies and raising costs across the poultry and animal-protein sectors, Divya Kumar Gulati, chairman of the Compound Feed Manufacturers Association of India, told Platts.

Corn accounts for around 55% of Indian poultry feed formulations, making its availability and price critical to chicken and egg production, Gulati said in written responses.

India's poultry-feed requirement is around 30 million metric tons/year and is increasing by an estimated 3 million-3.5 million mt annually. If corn maintains its current inclusion rate, the growth would require an additional 1.65 million-1.93 million mt of corn each year, or 8.25 million-9.63 million mt over five years, according to Gulati.

"This is a significant requirement, especially when ethanol producers and other industries are also looking at corn as a key raw material," he said.

The warning comes as India shifts further toward grain ethanol after the government prohibited production from sugarcane juice and B-heavy molasses during the ethanol supply year 2026-27 (November-October).

Oil marketing companies are seeking around 11 billion liters of ethanol, with corn, damaged grains, surplus Food Corporation of India rice and C-heavy molasses among the principal eligible feedstocks.

Moreover, India has instructed sugar-producing states to prevent mills and distilleries from producing ethanol from sugarcane juice and B-heavy molasses during the 2026-27 ethanol supply year (November-October), formally enforcing a zero-sugar-diversion policy that shifts more of the country's blending requirement toward grain-based feedstocks.

Ethanol and feed industry participants have consequently made competing requests for government support and feedstock access.

The sector has highlighted feed cost pressure as a significant challenge. Feed accounts for around 65% of total production costs, making it the single largest cost component in poultry farming.

Rising prices and expected shortages of corn and soybean meal are creating significant pressure on margins. This is further intensified by competing demand from other sectors, including ethanol production.

Competition varies regionally

Feed manufacturers and grain distilleries are competing for the same corn in some markets, particularly around major producing regions and ethanol plants, Gulati said.

Delivered costs are also affected by freight, handling and storage, meaning feed manufacturers can face higher procurement costs even where the underlying farmgate price changes only modestly.

"We need better market-level data on procurement prices, grain arrivals and transportation costs to identify where the pressure is greatest," Gulati said.

Indicative corn prices across markets monitored by CLFMA rose 14% between June and August, from 2,201 rupees/100 kilogram to 2,510 rupees/100 kg, while average broiler and egg prices fell sharply in August, adding pressure to poultry margins.

Smaller livestock farmers are particularly vulnerable because they have less bargaining power and fewer opportunities to secure ingredients through bulk purchases, Gulati said.

Higher feed costs can ultimately affect consumer prices for chicken, eggs and other animal proteins if producers pass the increase through.

DDGS offers partial offset

Additional distillers dried grains with solubles from ethanol production could help diversify the feed industry's raw-material basket, but cannot replace corn on a one-for-one basis.

Corn primarily provides energy in poultry diets, while DDGS contributes protein, fiber and other nutrients. Wider use would require consistent quality, reliable supply, competitive pricing and confidence in nutritional composition and safety, according to Gulati.

Feed manufacturers are also evaluating broken rice, wheat by-products, sorghum and pearl millet, although differences in digestibility, energy content, quality and transport costs limit substitution.

"Alternative ingredients can certainly help, but increasing domestic corn production remains equally important," he said.

Safeguards before higher blends

CLFMA is not seeking a blanket restriction on grain use for ethanol, but wants clear intervention triggers tied to corn production, arrivals, inventories, feed requirements and prices.

Temporary, calibrated measures could be introduced when supplies tighten materially or feed companies struggle to procure sufficient quantities at viable prices, Gulati said.

Policy options include improved seeds and farm practices, investment in drying and scientific storage, targeted feed reserves, calibrated grain allocations and flexible imports when necessary.

Any increase beyond E20 should proceed in phases and be linked to measurable gains in corn productivity, alternative-feedstock availability and supply-chain infrastructure, he added.

"Our concern is not with ethanol production itself, but with ensuring that additional demand for corn does not put excessive pressure on feed availability and costs," Gulati said.