January 5, 2022

A hurdle for India's import of soymeal to meet poultry farmers' demand

In the last decade, India's broiler sector was growing at the rate of 8-10% every year.

Based on industry experts and market research reports, the sector is likely to grow at a compound annual growth rate (CAGR) of 7-8% for the next 10 years. Monthly broiler production was around 350 million broilers during 2019.

For the last two years, rising soybean meal prices since March 2021 affected the profitability of poultry farming in the country. Additionally, industry data showed that poultry placements returned to 320 million per month.

Nevertheless, in the same period, many startups in the field of chicken and egg deliveries found some success. The market for online purchases of meat had grown by two to three times, a sign that consumer behaviour is changing.

Concerning corn, around 14-15 million tonnes are needed by poultry farmers every year. The local poultry sector's soybean meal requirement is around 5.5-6 million tonnes. However, corn and soybean acreage and yield are not growing at pace with poultry production. This would be a major challenge for India's poultry sector in the years to come.

Speculations in online commodity trading are also another short-term challenge.

Although India allowed imports of soybean meal, the import window was very short. Out of 12 million tonnes set in the quota, only 6-7 million tonnes of soybean meal were permitted to come in during September and October 2021. Poultry associations had requested to extend the date for the window until March 31, 2022, to allow the remaining quantities to enter the country. However, this request was rejected by the government following protests by local farmer associations. Farmers fear that domestic crop prices will plunge if more imports are allowed.

The Soybean Processors Association of India (SOPA) also opposed the demand for extension of the window for the import of genetically modified soybean meal to March 31.

According to SOPA, the soybean meal supply situation is stable and there is no need for further imports by extending the window. Current prices of soybean meal are said to be reasonable, taking into consideration soybean prices and farmers' expectations.

For the 2021-22 period, the total supply of soybean is 12.37 million tonnes. Of these, there will be a carry-forward stock of 1.62 million tonnes for 2022 (with 9.2 million tonnes set aside for crushing, 1.2 million tonnes for sowing, 0.3 million tonnes for direct consumption and 50,000 tonnes for exports).

For soymeal, there is an availability of 7.98 million tonnes for the 2021-22 period. According to SOPA, there will be a carry-forward stock of 184,000 tonnes for the next year, after considering 5.8 million tonnes for poultry and aqua feeds, 1.2 million tonnes for exports and 0.8 million tonnes for usage as food.

SOPA has already flagged the issue of hoarding and undue speculation of soybean futures.

For oil meals, their export in the first seven months of the current fiscal year dropped by 11% as Indian soymeal and rapemeal were priced higher in the global market than Brazil and Argentina.

Overall, the export of oil meals slid to 1.43 million tonnes during April-October of this fiscal period against 1.62 million tonnes during the same period a year ago.

Soybean crush margins are currently squeezed by pressure on meal prices and relatively high price expectations of farmers for soybean. The further reduction of import duties on vegetable oils recently has also taken away some protection for Indian oilseed crushers and curtailed their ability to offer soymeal and rapeseed meal competitively in the global market.

India is unlikely to export in the next two to three months due to the high price of domestic soybean seeds. The silver lining is that a sufficient quantity of soybean meal will be available for poultry feed in the domestic market, according to the Solvent Extractors Association of India.

In the meantime, the National Green Tribunal (NGT) has asked the Central Pollution Control Board (CPCB) to issue guidelines for poultry farms with more than 5,000 birds, arguing that their owners cannot be considered small farmers nor their pollution potential left unregulated.

In another development, India's Department of Animal Husbandry and Dairying has signed a memorandum of understanding with the Ministry of Food Processing Industries to extend the benefits of various government schemes to beneficiaries by providing them credit support in establishing dairy processing, meat processing and animal feed plants.

- Dr. Dinesh T. Bhosale