Ethanol Effect: Why Your Eggs Are Getting Costlier

India's push to expand ethanol production is beginning to affect another staple food item after sugar, with rising maize diversion to biofuel production driving up poultry feed costs and, consequently, egg prices.

Egg prices have climbed around 35-40% over the past year, according to National Egg Coordination Committee (NECC) data. Eggs are currently selling at about ₹7 apiece at the farm gate, while retail prices have reached ₹8.50-₹9.

Poultry industry executives expect prices to remain elevated and potentially rise further as winter approaches, when egg consumption typically increases.

"Roughly 37% of the total maize production is now going to ethanol distilleries. In the past one year, egg prices have gone up by nearly 40% and are likely to rise further," a senior NECC official told The Economic Times.

Ethanol competes with poultry for maize

The increase comes as India's ethanol blending programme has expanded. Oil marketing companies are required to blend petrol with ethanol before it is sold at fuel stations, with the blending rate now reaching 20%.

The higher mandate has increased the amount of sugarcane and maize being diverted towards ethanol production. This has tightened supplies available for sugar production as well as animal feed.

Maize prices have surged to nearly ₹26,500 per tonne from around ₹14,000 three years ago. Prices have risen almost 20% in just the past five months, adding significantly to poultry farmers' production costs.

Parliament data shows that India produces around 43.4 million tonnes of maize annually, of which nearly 17 million tonnes are currently being channelled into ethanol production. That leaves less grain available for poultry feed and other industrial uses.

Maize demand for ethanol surges

Maize-based ethanol production has expanded rapidly in recent years. Output rose from around 1 million tonnes in 2022 to more than 6 million tonnes in 2024 and has now reached roughly 17 million tonnes.

Industry estimates suggest production could climb to around 25 million tonnes by 2030.

The shift is particularly significant for the poultry sector, which accounts for roughly 60% of India's maize consumption. Poultry producers and ethanol manufacturers are therefore increasingly competing for the same crop.

India shifts from maize exporter to importer

Growing domestic demand is also reshaping India's position in the international maize market.

India was previously a significant exporter of maize to markets including Bangladesh and Vietnam. But rising consumption by poultry producers, combined with the growing diversion of maize to ethanol, has reduced the domestic surplus available for exports.

The tightening supply has instead pushed India towards imports. The country's maize imports reached a record 1 million tonnes in FY25, prompting it to bypass normal trade quotas to source non-GMO maize from countries such as Myanmar and Ukraine.

Imports currently stand at around 500,000 tonnes, but industry executives expect volumes to increase further if domestic maize production fails to keep pace with demand from the poultry and ethanol sectors.