Record-high stock levels of feed resources like corn grain and soybean meal are set to keep the worldwide commodity prices low during 2017, as per Rabobank report. What is your outlook with regard to the stocks of these feed resources in Indian commodity market?
Domestic production of Corn has taken a hit for a third year in a row on account of poor spatial distribution of rain this year. The southern peninsula which is a key Corn producer had dryness in July and August and that impacted production negatively in Karnataka, Telangana and Tamil Nadu. Prices hence are expected to be firm through till the next Kharif harvest despite good Rabi production in AP and Bihar.
Soybean production has been better than in the last 3 years owing to good rains in Central and West India. We are in a comfortable supply environment hence on Soybean meal currently.
Indian commodity market is not in sync with international markets. How do you explain that?
India has detached itself from international markets as the exportable surpluses have dwindled on account of poor crop outturn and growing domestic demand both in the poultry and cattle feed segments. This is not expected to dramatically change until we link back to either being exporters or importers of these commodities
In your view, what is the outlook for corn and soybean production in India for the year 2017-2018?
Much will depend on the precipitation patterns during the Monsoon season. Carry outs are down to very low levels on Corn. Soybean though looks comfortable in the current season. India needs good rains to augment agricultural production
What are your observations with regard to India import requirement with respect to these feed ingredients, to meet its domestic demand?
We are already seeing some imports of Corn under the Advance License scheme by the domestic starch industry against export commitment of Starches & sweeteners. Unfortunately owing to the matter being sub judice, the TRQ which allows import of Corn at zero duty is held back for issue. So the feed industry will not have ability to import till that matter gets resolved.
How do you compare supply and demand pattern of Indian market to that of Asian market? Where does India stand in Cargill’s Asia-Pacific plan?
India is a large producer and consumer of Corn and Soybean and would have had reasonable size export surpluses had weather change not impacted the Indian monsoon. If weather turns to benign in the oncoming year we will see production trending back to normal and bring back the export flows. Over a longer time frame as the country prospers and diet preferences change to protein from the current calorie focus, the country would seek augmentation of supply of feed ingredients – Corn and Soybean. If this does not happen India could be staring at the prospect of becoming a structural importer
India is very uncompetitive in global commodity market compared to Brazil and Argentina. Could you spell out the reasons for that?
South America is gradually bringing in large acreages into agriculture. And the farmholdings are significantly bigger as compared to the fragmented holding in India rendering scale to their production keeping their cost of production low. Also productivity is much higher in the Americas with the usage of GM seed. Theseare the key reasons for their competiveness.
What are the impacts of Demonetization on commodity market in India? Could you draw any bigger picture of this impact?
In the immediate aftermath of the demonetization announcement supply chains got disrupted. Farmer selling stopped and prices rallied. On the other hand sales of the feed industry suffered and their margins were squeezed.
How do you see the future of feed industry in India shaping? What are the short-term and the long-term growth projections for Indian feed industry?
Poultry feed industry has been growing at a steady rate of 6-8% and we should continue to see robust growth there on account of an increasing population. The rising income levels will also see protein requirement going up.
Cattle feed consumption is also seen as recording a 4% growth. This is further helped by a shift from backyard to compound feed.