MONEY MAKING: Go for Corn instead of Gold

BUSINESS MINDS


 You know what a chicken burger really is, don’t you?

Corn upon corn upon corn, beginning with corn-fed chicken in the patty held together by corn starch and corn-derived food additives between buns containing high fructose corn syrup.

Corn is the secret ingredient in modern processed food as well as hundreds of products on supermarket shelves. Corn is the cornerstone of industrial animal farming and the American ethanol industry. That makes corn the world’s most exciting cash crop. This year, USA alone will grow corn worth more than $70 billion, five times more than what its wheat is worth.

Corn hasn’t yet reached that scale in India. But the excitement is palpable in Asia’s second largest grower.

There are two reasons behind corn’s enormous success as industrial ingredient. One, corn starch is sugar that can be broken down into molecules and reassembled easily.

The second factor was hybrid seed technology that increased corn yields 40% in last 20 years. Today’s corn supply is 70% more than 1988. Higher production per acre has made corn abundant, cheap and able to keep pace with growing demand. So user industries need not worry about the price of corn for the next couple of decades. Its unique combination of molecular versatility and high productivity has made corn the universal darling.

Among the first to discover corn’s economic value was the poultry and livestock industry. Cows and chickens don’t naturally eat corn. But corn-fed animals gain weight faster than normal, thus paving the way for industrial animal farms seeking efficient conversion of grain into animal protein. Almost half of the world’s corn is fed to animals.

Technology helped processed food industry convert corn starch into sweeteners, binders, thickeners and additives. High fructose corn syrup replaced expensive white sugar in colas, salad dressings and desserts.

The latest to join the corn bandwagon is the bio-fuel industry that is fermenting and distilling corn starch into ethanol. Next year, for the first time US will use more corn for ethanol than for animal feed. With rising global demand for animal protein and starch, corn demand is rising too. Countries that don’t grow corn are importing it from USA, Brazil, Argentina and India. International corn trade is now larger than international rice trade. China recently turned net importer.

India is on the threshold of a similar corn revolution. The introduction of high-yielding corn hybrids in the Nineties turned a subsistence cereal into a valuable cash crop for even small farmers in Bihar, Andhra Pradesh, Karnataka, and UP.

Traditionally, corn was a summer crop. But the new hybrids could survive low winter temperatures, off-season diseases and pests and gave two times higher yields. Today India has two harvests, boosting acreage and supply. It turned from importer into exporter.

Simultaneously, higher incomes began helping India shrug off economic vegetarianism. More people can afford chicken, eggs and meat. The availability of affordable feed helped poultry farming shift from backyards to companies listed on the stock exchange.

The continuous tug-of-war for corn between food, feed and starch industries here and overseas has kept prices attractive for Indian farmers and traders. With drought affecting USA’s corn crop this season, international prices are at multi-year highs. That means prospects for Indian corn export are extremely bright. In the next fiveyears, demand in India from poultry will rise 80%, livestock 35% and starch industry 13%. Will supply keep pace? Undoubtedly.
Though nowhere near the world average, Indian yields are growing faster, almost 4% annually, because farmers are willing to invest in a profitable cash crop. In the next five years, supply could jump 40% to touch 25 mn tonnes at least.

In fact, farmers are expected to purchase corn seed worth Rs 1,000 crore annually by 2016. That sheer market opportunity has put seed companies in overdrive. Quick out of labs are hybrids that can overcome drought, more diseases, pests, and heat. They are designed for mechanized harvesting and chemical sprays instead of manual weeding to reduce labour costs. Hybrids are being tailor made for each region and season to make corn a pan-Indian crop. Once biotech corn is permitted, it could be a game-changer like BT cotton.

Industrial technology, consumer demand and industrial farming have created a global corn revolution that is now trickling into India. Our corporate investment in corn technology beats rice, wheat and oilseeds.

What of the future? In DuPont India’s knowledge centre at Andhra Pradesh’s Genome Valley lies a blue shirt made from a stretchable fabric derived from corn. It is the perfect confluence of science, agriculture, manufacturing, and consumer taste. With talks on with textile companies for commercial- ization, corn-based clothing could be in your wardrobe sooner than you think.


…shabab khan
(author is in foreign trade)

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      BUSINESS MINDS     

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About Shabab Khan

A Journalist, Philanthropist; Author of 'The Magician', 'Go!', 'Brutal'. Being a passionate writer, I am into Journalism and writing columns, news stories, articles for top media house. Twitter: @khantastix khansworld@rediffmail.com
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