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Amid US-China trade conflict, India eyeing soybean export opportunity
Tuesday, 25 September, 2018, 08 : 00 AM [IST]
Ashwani Maindola, New Delhi
With the trade conflict between China and the United States snowballing, exporters from India, particularly of soybean meal, are eyeing opportunities that they might land with in the neighbouring country.

In this regard, recently, many soybean processing plants in India were inspected by concerned authorities such as the Export Inspection Council India, for preparedness to avail export opportunities to China.

A point to be noted is that for the last six years, Chinese authorities have banned the import of soybean meal from India on the basis of non-compliance with food safety norms.

However, after the US-China trade war escalating into a major conflict, China is eyeing other countries, including India, to source its requirements. In fact, Chinese authorities recently visited rice plants in India for the same reason.

The background being China imports soybean mainly from the United States and Brazil, crushes domestically and fulfils the demand of vegetable oil and protein meals. The Asian nation was importing about 1-2 lakh tonne of soymeal from India, until a ban was imposed on it in 2012 on phytosanitary grounds.

The export of soybean meal from India to China has reduced to under 8,305 tonne in 2017-18. The share of soymeal export destined to China was in the range of 3-6 per cent of the total soymeal exports from India.    

While the visit by the Chinese authorities has still not been confirmed, experts have opined that if indeed that happened, India could emerge as a big source for soybean meal supplies to China, which is aggressively looking for a reliable supplier to fulfil its domestic demand in the absence of US exports, which accounted for almost half the Chinese demand.

Business with the US suffered due to growing trade imbalance between the two nations. The imbalance is a result of the Trump administration upping the ante against China and hiking the import duty on a number of products from the Asian nation. In a retaliatory move, the latter too hiked the duty on several American products.

Offering views on the issue, Purushottam Sharma, senior scientist, agricultural economics, ICAR-Indian Institute of Soybean Research, Indore, stated that since China was the largest importer and consumer of soybean, there were immense opportunities for India.

“The export of soybean meal from India has decreased significantly from 5.25 million tonne in 2010-11 to 0.41 million tonne in 2015-16, though improved recently to 1.89 million tonne in 2017-18, due to lower production, price competitiveness, quality and other issues,” he added.

“This has resulted in decline in domestic prices of soybean and farmers were not able to even get the minimum support price (MSP) for their soybean produce. Therefore, the government is trying to increase the export of soybean meal, which can improve the market sentiments for soybean and farmers can receive a better market price,” Sharma said.

“With the good monsoon this year and higher area put to soybean, domestic production of soybean is expected to increase. Any effort to boost soybean meal export from India will help containing price decrease for soybean particularly after harvest,” he added.

Sharma stated, “However, China imposed ban on import of soymeal from India in 2012, mainly on phytosanitary issues. Chinese authorities then claimed, as per quality tests, to have found some cargoes contaminated with malachite green, a dye widely used in India for marking jute bags/sacks.”

“Non-tariff barriers like plant inspection and quarantine protocol are long pending. The import tariffs on soybean are at three per cent and soybean meal at five per cent. By imposing tariffs on import of soybean meal and import ban, China created a positive environment for local crushing which has increased steadily,” Sharma said.

Meanwhile, the production of soybean in India is around 10-11 million tonne. About eight per cent of it is retained for seed, and 5-8 per cent is used for food purposes (soy milk, tofu, and other food products).

Of the remainder, about 85 per cent is crushed for oil, with about 17.5-18 per cent recovery of oil and 82 per cent of meal/cake.

Thus, the country produces on an average 7-7.5 million tonne of soybean meal yearly. The reduction in soybean production on account of weather woes does also affect the domestic production of soymeal.    

On the reports of Chinese authorities planning to visit India for inspection, Sharma opined that amid the growing US-China trade dispute, China imposed 25 per cent import tariffs on US soybean.

To fulfil the high demand of protein meals for animal feed industry, China is looking to source from other countries, and India presents a logistic advantage as the meals can reach China within a week’s time.
 
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