The US, the world’s second-largest soybean grower, has become the biggest importer of the Indian soymeal as nearly 95 percent of its crop is genetically modified (GM) and the Indian product meets Washington’s need for special applications.
“Indian soymeal is given priority in the US since it needs non-GM soybean. Hardly five percent of the soybean crop in the US is non-GM and those who want non-GM soy products there have to pay a premium. That way, the Indian soymeal is competitive (and gets bought),” said BV Mehta, Executive Director of Solvent Extractors Association of India (SEA).
According to Agricultural Market Information System of the Food and Agriculture Organisation, an arm of the UN, soybean production in the US during the current season (July 2020-June 2021) is estimated to be 116.2 million tonnes, the second-largest after Brazil’s projected 132 million tonnes.
India’s soybean is estimated at 12.4 million tonnes but The Soybean Processors Association of India, also known as SOPA, and SEA have pegged it lower than initial estimates of 10.45 million tonnes in view of damage to the crop due to rain and virus attack.
Soybean is crushed to get soybean oil, while the soymeal comes out as de-oiled cake or expeller is used domestically and abroad for various purposes, including chicken feed.
According to SEA data, soymeal exports to the US increased 19.5 percent in the first half of the current fiscal to 1.31 lakh tonnes against 1.10 lakh tonnes during the year-ago period.
Overall, oilmeal exports to the US recorded the highest growth among importing nations. Among other nations, Taiwan and Vietnam registered 15.17 percent and 14.26 percent increase in Indian oilmeal imports during the period.
Soymeal export growth was a meagre 0.11 percent, or 11,000 tonnes, in the first half of the fiscal compared with the six percent growth in overall oilmeal shipments.
According to SOPA chairman Davish Jain, the US had been buying Indian non-GM soybean but it has now begun importing soymeal from India.
“Only India produces soymeal for special food applications that need to be labelled as non-GM or organic in the US. Indian soymeal helps in making cakes without chemicals and hexane,” Jain said.
The US has emerged as the biggest buyer of such specialised soymeal and its demand was growing, the SOPA chairman said.
“A lot of manufacturing units have been established in our country to produce the material (soymeal) for the export market and it attracts a premium. The producers do not extract oil totally from the soybean to produce this soymeal,” Jain said.
Normally, the oil content in soymeal is one percent. However, the soymeal meant for the US has six to seven percent oil content, he said.
“Indian soymeal is also used as chicken feed in the US where there is a demand for non-GM meal,” SEA’s Mehta said, adding that India’s non-GM soymeal was getting good demand in developed nations such as Europe and Canada.
Soymeal exports to the advanced nations were helping India make up for a fall in exports to other destinations, Mehta said.
“Last year, soymeal exports to the US made up close to one-third of total soymeal exports from the country,” SOPA’s Jain said.
According to SEA data, soymeal exports hit a three-year low last fiscal at 6.92 lakh tonnes compared with 13.58 lakh tonnes during 2018-19. Soymeal shipments dropped due to disparity in exports and better utilisation in the domestic market.
In the first half of the current fiscal, soymeal exports to the US were next only to the 1.79 lakh tonnes of various oilmeals shipped to Bangladesh.
Soymeal exports are fetching higher returns than other oilmeals. Indian soymeal is being shipped at $479 (Rs 35,400) a tonne compared with $470 (Rs 34,700) last month.
Jain said a five per incentive provided by the Centre under the Merchandise Exports from India Scheme (MEIS) helped the soymeal exports to some extent.
“ MEIS helped offset a lot of costs we incurred in exporting soymeal. We have to compete against inefficient infrastructure, higher transport costs and high port charges.
“We face quite a few disadvantages in moving our products from hinterland to the port and the incentives helped,” the SOPA chairman said.
However, MEIS ends on December 31, causing concern among the exporters.
“We don’t how to find a substitute for these disadvantages. We have written to the government (seeking help),” Jain added.(Subramani Ra Mancombu is a journalist based in Chennai who writes on commodities and agriculture)