June 2015: India’s declining soymeal exports could drive a sustainable niche for the country in supplying the global non-genetically modified (GM) market, says Rabobank in its report.
The Dutch bank, released a report titled ‘Losing Steam: India’s Soymeal Exports Are Drying Out’ which predicts that at the current rate of decline, India’s soymeal exports could dry out within five years. However, as exports decline this could also drive a price premium for non GM soymeal (which India is a key supplier of globally) and re-stimulate domestic production of soymeal.
In recent times, strong growth in the animal protein and dairy industries in India, combined with soybean production constraints has led to a sharp decline in Indian soymeal exports.
India is among the most important suppliers of soymeal and corn to South East Asia and also a key supplier of non GM soymeal to Europe and Japan, which are the major markets for non GM soymeal.
Currently about 12% of the world’s soymeal production originates from conventional soybeans (non GM) but the actual availability of non GM soymeal at the world markets is much smaller as the beans are often comingled and cannot be separated in the supply chain. Reduced availability of India’s non GM soymeal could therefore create a higher premium for it in the near term, and bring a new market opportunity for India’s farmers.
Pawan Kumar, Director, Food & Agribusiness Research & Advisory for Rabobank said, “Soymeal is a vital feed commodity for the animal protein industry and the reducing role of India in soymeal trade is already impacting trade flows globally.”
“India’s quickly reducing participation could bring about constraints on non GM soymeal supplies to EU and Japan and generate a higher premium for non GM soymeal in the near term. Higher prices could stimulate more production of soybeans in India – potentially enabling India to carve a sustainable niche in the non GM market,” he concluded.
Rabobank’s report further highlights that this trend will see South East Asia become more reliant on Latin America to meet its growing need for soymeal as the region’s poultry, livestock, and aquaculture industries thrive on the back of rising consumer demand for these products. South East Asia’s demand for soymeal is set to grow by 68% by 2020 and traditionally India has been its largest supplier, providing 36% of soymeal imports in 2008.
“Exports from India are set to decline to 1.2 million tonnes in the year started October 1 and drop to negligible levels by 2020 as domestic demand surges and the harvest stagnates. That’ll force countries to turn to Brazil, Argentina and the US for supplies,” he said.
Poultry is a leading form of meat protein in Southeast Asia and demand is increasing as incomes rise, driving consumption of livestock feed such as soybean meal. The region’s imports more than doubled in a decade to 13.7 million tonnes in 2013-2014 and will rise to about 20 million tonnes by 2019-2020, Kumar said. Production growth in the region is constrained by a lack of additional land and water, he said.”India’s crop is not enough to cater to both domestic and export markets,” Kumar said. Indonesia will probably buy 4.7 million tonnes of soybean meal in 2015-2016 followed by Vietnam with 4.3 million tonnes and Thailand with 3 million tonnes, according to the US Department of Agriculture (USDA). Only the European Union imports more.
Argentina is the biggest exporter of soybean meal and will probably ship 31 million tonnes in 2015-2016, according to the USDA. Brazil is the second largest with 14.5 million tons and the US ranks third with 10.7 million tonnes, the data show. India is losing customers because supplies are more expensive than global rates as a result of the crop’s non- genetically modified status and lower supply, Kumar said.
The soybean harvest will probably total 10 million tonnes to 12 million tonnes annually over the next five years, yielding about 7 million tonnes of feed, Kumar said. Domestic demand for the feed has expanded by 12 per cent a year in the past decade and may jump to seven million tonnes in 2019-2020, he said. The Rabobank report further predicts that India domestic corn supply, which tripled between 2007 and 2013, will continue to grow at approximately 7% per annum, and continue to play a key role in future feed trade to South East Asia.
Source: Business Standard and Internet