World’s soy meal dependence increased by 24.63 million tons between 2011/12 and 2014/15 and the corresponding increment for South Asia is 2.60 million tons. The change percentage for the former is 13.84 % while for the later it is 57.01% indicating that the change is very rapid in the Asia Subcontinent (ASC) region. The change that is about 4 times higher is indicative of increasing demand and rapidly developing industries that need more soy meal as a consistent protein source in the region. This change has resulted in some dramatic changes in the South Asian region and in India.
Consumption of soy meal in South Asia region is therefore continually on the rise and there has been an incremental use of 2.6 MMT in the last four years. However USDA predicts that there will be further increase in meal consumption between 2014/15 and 2015/16 indicating usage of 1.53 MMT. It is stated that the consumption demand in South Asia will be 8.69 MMT in 2015/16. Because India’s production of soy meal is expected at 5.16 MMT in 2015/16, there is a supply demand gap that is clearly evident. To produce 8.69 MMT of meal within the South Asia region about 10.60 MMT of soybeans have to be crushed for animal feed purpose alone. So the total beans that would need to be produced will be 13-14 MMT to keep soybeans for sowing, direct bean usage and human food applications in the form of soy flour and texturized soy protein.
For the supply of 3.53 MMT soy meal for South Asia, an additional 4.31 MMT additional beans have to be crushed in order to bridge the gap. Because of this market transformation, India’s neighboring countries viz. Bangladesh, Nepal and Pakistan have aggressively taken up soybean imports to meet the meal and oil demand. The three countries are planning to import close to 3 MMT of soybeans in 2015/16.
Using three factors to forecast soy meal demand in South Asia, a major consumer being India, the requirement by 2020 is estimated at 11-13 MMT. The change percentage in the last five year (2010-2015), Alltech’s global feed survey and South Asia’s industry response are the three different methodologies that have been used for assessments. To produce this quantity of meal the region will need 13-16 MMT of whole soybeans for crushing.
Chicken production in Bangladesh, just on account of a reduced cost of meal input into feeds at 22% inclusion seems cheaper by INR 9/bird when compared to Indian production costs. This was calculated based on $380/MT landed cost of soy meal transacted into Bangladesh for the June 2016 shipment. Likewise their egg, shrimp and fish production too is at a relatively lower cost.
By addressing the soy oil industry the animal feed industry could get benefitted because when soybeans are crushed they yield 82% soy meal and 18% soy oil. The major users of soy oil in the south Asia region are India but Bangladesh and Pakistan put together also account for a one million ton of soy oil usage. From past performance, the five year time span (2011/12 to 2015/16) indicated an incremental usage of 2.60 MMT of soy oil for the three countries. About 14.47 MMT of whole soybeans would have been crushed at various crushing locations to meet this requirement.
As forecast for 2020, soy oil consumption change in the past five years (2.60 MMT) is added at different conservative proportions (@ 50% and 75% volume) to current utilization in South Asia, which is 5.86 MMT. The computation shows soy oil utilization of 7-7.8 MMT by 2020. Translating this to whole bean requirements, the region would need 40-43 MMT of soybeans to produce this quantity of oil. The scope for import of soybeans to produce both oil and meal within the region is very high. This is an explanation for recent imports of soybeans into Bangladesh and Pakistan.
From the few analogies discussed here, it is evident that the demand for soy protein is rising faster than the regions ability to supply. South Asia which includes India is in the global hot spot for hunger and malnutrition and is thus needy of low cost protein and energy for its betterment. In addition to this, the region is a major producer of animal products from the poultry and aquaculture segment, so much so that the region appears and is recognized on world charts. Coupled with an internal need for protein and to support some of the mighty production processes, soy would be a prominent commodity. Further fuelling demand and growth is the population of south Asia (1.66 billion), a strong number for youth below the age of 24, growing economy and the regions desire to up its human development index (HDI) are positive pointers that cannot be ignored.
Thanks to Dr. Vijayanand for his expert advice and suggestions on the article.
Dr. Yadu Nandan, Consultant – Animal Feed Program
United States Soybean Export Council