December 15, 2004

 

 

India's Soymeal Exports Hindered by Shortage of Rakes

 

Plans to step up soymeal supplies to Pakistan and Bangladesh are hindered due to the shortage of railway rakes, according to India's soymeal exporters.

 

"Due to shortage of rakes, we have to wait endlessly in queues and are able to supply only 10 rakes (20,000 tonnes) of soymeal per month to Pakistan and Bangladesh," said Rajesh Agrawal, chairman of the Soybean Processors Association of India (SOPA).

 

Better availability of rakes would help the industry lobby double exports to the two countries.

 

"Given that global buying sentiments are low with a huge crop production in the US and a bumper crop in Brazil and Argentina, we would like to take advantage of the logistics and double soymeal exports to Pakistan and Bangladesh," Agarwal said.

 

The Indore-based industry lobby has reported that due to the high domestic price of soybean led by lower-than-expected production and farmers holding back stocks in anticipation of better prices later, many of the processors have stopped crushing soybean.

 

The erratic monsoon this year has also led to a drop in production despite a higher acreage being brought under soybean cultivation.

 

The winter crop production is expected to be 7.2 million tons this year as against 6.93 million tons in 2003-04, according to the second assessment report of SOPA.

 

To help the soymeal processors revive operations, SOPA suggests exporting to markets nearer home in the Asian region.

 

Apart from Pakistan and Bangladesh, which imported 300,000 tons last year in total, the soymeal exporters are looking at markets in the Asian region outside the South Asian Association for Regional Cooperation (SAARC).

 

"Provided transportation issues are resolved, we hope to export around 500,000 tons of soymeal to Pakistan and Bangladesh, which are bigger markets. Being closer markets, India is a cheaper source of soymeal, used mainly as poultry feed," said Agarwal.

 

Besides the high global production, the sliding US dollar is making Indian exports less remunerative, said exporters.

 

"In fact due to the sliding of US dollar, India may see higher imports of soybean oil during the current year to 1.5 million tons up from one million tons last year," said Agarwal.

 

"On the other hand, the soymeal exports are expected to slide to 2-2.5 million tons as against 3.2 million tons in 2003-04. Last year, the price rationalisation was better due to higher global prices. The situation during the current year is entirely different and indicates weak signals," he said.

 

The industry is therefore looking to the domestic market and the Bangladesh and Pakistan markets for growth.

 

The domestic demand is estimated to be only around 2.5 million tons with the poultry industry being the biggest consumer. Despite being the richest source of protein, the domestic consumption of soybean as food continues to be much lower than desired, according to the SOPA study.

 

Hindering the growth of the soybean industry are high state taxes in some cases, the industry lobby said. Together with the tax issues, the industry is losing almost Rs.500-700 per ton of soybean crushed, the lobby pointed out.

 

It has sought the central government's intervention to provide World Trade Organisation-permissible transport subsidy to exporters as done in the case of sugar and earlier for wheat.

 

SOPA has also approached the state governments to rationalise the tax structure to help processing units.