European Union, US sanctions prompt Iran to increase dependence on Indian imports, say experts
The sanction-stricken Iran is silently emerging as India's biggest destination for oil meal exports. As per the latest figures issued by the Solvent Extractors' Association (SEA) of India, Iran imported 97,904 tonnes of oil meals in April 2012 compared to 50,022 tonnes in April 2011, up by 95.72 per cent making it the largest importer of oil meals from India during the month.
Industry insiders attribute this sharp growth in Iran's oil meal imports from India as a fall out of the trade embargo put on the country by Europe and the US for its alleged nuclear proliferation programme.
"There has been a trade embargo on Iran from Europe and US. Turkey too has banned its trade with Iran. Latin America, which was a major supplier of oil meals to Iran, is faced with drought. So, now Iran has to depend largely on Indian imports of animal feed," said Biren Vakil, an industry expert in Ahmedabad.
Looking at the data for one year period, Iran imported a total of 230,760 tonnes of oil meals during April-March 2011-12, which is higher by 31.22 per cent against 175,846 tonnes in 2010-11.
However, the imports rose sharply during the last quarter of the year. In the month of March 2012 alone, India's oil meal exports to Iran had jumped by close to 164 per cent to 39,798 tonnes from 15,077 tonnes in same month last year.
"The sanctions on Iran has helped Indian oil meal exporters to shift focus from China to Iran as China has stopped oil meal imports from India since January this year," said B V Mehta, executive director, SEA.
Adding further he mentioned that over the past few years, Middle East region has emerged as a major market for India's oil meal exports.
"Two years back we had taken a delegation of exporters and traders to Middle East including Iran to explore the market there. The growth in exports to this region is a result of that effort," added Mehta.
Factors such as lower crop of soybean in Brazil, a major growing region for the commodity was a key driver for price rise in oil meals due to widening demand-supply gap in the international market.
"Internationally the supply is less, additionally, Iran is laden with trade sanctions from US and EU. Therefore, Iranian demand for Indian oil meals has witnessed sharp increase. These are the factors, which has definitely helped the Indian oil meal industry as prices too have increased significantly over the past one year," added Mehta.
The average international price for oil meals have increased in the range of 15 to 25 per cent. Soybean meal prices jumped from US $ 408 per tonne (FAS/FOB/Indian port) in April 2011 to US $ 509 per tonne in April 2012, up by 24 per cent.
Similarly, rapeseed prices increased by 18 per cent during the year from US $ 210 per tonne in April 2011 to US $ 248 per tonne April 2012.
During April to March period of 2011-12, Middle East region imported 610,116 tonnes of oil meals from India, which is 90 per cent higher than 320,504 tonnes reported in 2009-10. India's oil meal export to Asian region stood at 45,26,089 tonnes during March-April 2012, which is higher by close to 50 per cent from 28,45,794 tonnes in 2009-10. Meanwhile, India's total oil meal exports rose by 71.2 per cent from 3,224,787 tonnes in 2009-10 to 5,522,312 tonnes in 2011-12. "For India, there is no restrictions put by the United Nations on trade with Iran. It is individual restrictions put by America and European nations that restricts trade with Iran.
Therefore, we can look forward for bright prospects for oil meal exports in this country," said Mehta.
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