February 9, 2011

 

Vietnam rejects Indian corn, soymeal exports on poor quality

 

 

Vietnam has rejected thousand tonnes of Indian corn and soymeal shipments, citing the presence of pests, according to several global trading executives on Tuesday (Feb 8).

 

India is Asia's largest exporter of soymeal and corn while Vietnam is one of its largest customers, and any delay or halt in shipments will force importers to make much-costlier purchases from Argentina and will impact sellers' margins.

 

Indian exporters and industry officials confirmed that the cargoes have been rejected, and said they may consider a halt to shipping further cargoes until the issue is resolved.

 

Two cargoes, one containing around 21,000 tonnes of corn and the other with a combined 20,500 tonnes of corn and soymeal, were rejected Tuesday (Feb 8) at Ho Chi Minh City port, said an executive at a global agricultural trading company.

 

Margins earned in the trade of corn and soymeal are very low, and such incidents will result in huge losses for Indian traders, who will be discouraged from exporting to Vietnam, Solvent Extractors Association of India Executive Director B.V. Mehta said.

 

Indian exporters have increased the dosage of pest control fumigation before shipment to an extraordinarily high level, under which it is impossible for pests to survive, at the request of Vietnamese authorities, he said.

 

However, the Vietnamese authorities have said pests are still present and are insisting that bulk shipments and even containers be returned, whereas they had previously allowed re-fumigation at the destination port, traders said.

 

They said one such cargo containing 22,000 tonnes of Indian corn is stuck at Hai Phong port.

 

In the past 10 weeks, more than 150,000 tonnes of Indian corn and soymeal has been either rejected outright or accepted only after re-fumigation, traders said.

 

Vietnamese importers said the matter should be resolved as soon as possible as they made payment for Indian cargoes at the time of shipment. They also prefer Indian corn and soymeal because it is cheaper than South American, takes less time to deliver and can be purchased in smaller lots.

 

Indian corn cargoes at US$290/tonne, cost and freight, are cheaper by US$55/tonne than Argentinean grain. At US$460/tonne, C&F, Indian soymeal costs US$35/tonne less than Argentinean cargoes.

 

Vietnamese government officials couldn't be reached for comment. According to official documents, they told Indian diplomats in Hanoi that in the past in the past, consignments from India containing pests were rare, but recently almost all shipments are infested.

 

After a recent meeting between Indian and Vietnamese officials, it was decided to increase the dosage of fumigation with methyl bromide to 100 grams a cubic meter for 72 hours from 80 grams for 48 hours, according to the documents. The usual dosage is 32 to 48 grams for 72 hours.

 

The fumigation is done under the supervision of the officials of India's Agriculture Ministry, which then issues a phytosanitary certificate.

 

India exports soymeal and corn fumigated with Aluminium Phosphine, considered milder than Methyl Bromide, across Asia, and no other Asian countries have complained of pests, said an Indian exporter whose shipment was rejected.