Karnataka mobilises distilleries to rescue maize farmers after price collapse
Karnataka’s government has moved swiftly to counter a sharp maize-price crash that threatened to cripple livelihoods of thousands of farmers across the state. Under direction from Siddaramaiah, Chief Minister of Karnataka, the state convened a meeting with distilleries and ethanol manufacturers to push for immediate procurement of maize at the government-declared Minimum Support Price (MSP) of ₹2,400 per quintal.
This comes against the backdrop of a record maize harvest — about 54.74 lakh metric tonnes produced over roughly 17.9 lakh hectares sown this season. Despite the bumper output, open-market rates plunged drastically: in many regions maize was fetching only ₹1,600-1,800 per quintal — far below MSP, triggering distress among farmers.
Facing mounting protests from growers, the state government moved to secure direct procurement. Under a new order, the Karnataka State Cooperative Marketing Federation (KSCMF) will source maize directly from farmers and supply it to selected distilleries. The procurement mechanism will be formalized via contracts specifying price (₹2,400/quintal), quantity and supply location. Farmers will be allowed to sell up to five quintals each under the arrangement, and payments will be made via direct transfer — typically within three days of procurement.
During the distillery-meeting, companies explained the constraints they face: under current allocations from the Centre, ethanol production capacity permitted in Karnataka is limited to produce roughly 26.3 crore litres. This requires about 7 lakh tonnes of maize — a fraction of the total surplus. Producers argued that procuring more maize would make ethanol economics unviable, given static ethanol selling prices and rising maize MSP.
Acknowledging the demand-supply mismatch, the Karnataka government has urged the Central Government to raise the ethanol quota for the state — and to ensure that procurement agencies such as NAFED and NCCF resume purchases under MSP guidelines. It has also called for a halt to maize imports from abroad — which are being blamed for depressing domestic prices.
The decision to activate KSCMF-led procurement and press distilleries offers a short-term relief valve for maize farmers. If implemented effectively, it could stabilise market prices and ease rural distress. However, structural issues remain: unless ethanol allocation norms and import policies are revised, or alternate industrial demand (poultry, feed, etc.) picks up, oversupply and price volatility could recur in the next cropping cycles.
For stakeholders in farm-linked agribusinesses and food processing — including dairy and feed sectors — this episode rings a caution bell: commoditised raw materials like maize can swing sharply when demand channels (ethanol, feed, industrial use) fail to absorb surplus. For a balanced agri-economy, policy-driven procurement and diversified demand pathways become essential to protect both producers and processors.
Impact of this decision on Maize prices in South India in near to long term
Maize prices in producing states will remain under pressure in the short term. Karnataka alone harvested a massive 54.7 lakh tonnes this season, while current ethanol-distillery allocations allow use of only about 7 lakh tonnes of maize — a small fraction of the surplus. Even with the government’s MSP-led procurement window, which lets farmers sell up to 5 quintals each, only a modest portion of the glut can be absorbed. As a result, market prices are likely to hover around ₹1,700–1,900 per quintal over the next few weeks, with little chance of a meaningful rebound toward MSP, unless demand intervenes unexpectedly.
Moving into the next 6–12 weeks, a mild recovery seems plausible — though a full correction remains unlikely without structural support. As mandi arrivals slow down after the kharif inflow subsides, soft upward pressure may emerge, possibly lifting prices gradually toward ₹1,900–2,150 per quintal by January–February. If poultry-feed demand strengthens — a typical seasonal uptick — and if an expanded procurement drive is launched (for instance by central agencies like NAFED or NCCF), some stability could return. A more optimistic scenario, in which ethanol quota for the state is raised and procurement volumes increase substantially, could push prices further toward ₹2,150–2,300. But barring those developments, processors and traders will likely see a modest rebound at best — not a return to pre-crisis levels.
Source : Dairynews7x7 Dec 3rd 2025 Deccan Herald