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Lack of R&D on soybean seeds is contributing to relatively low yield: Dinesh Shahra

Interview with MD, Ruchi Soya

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With record output estimated this kharif harvesting season, the Rs 13,000-crore Industries is intensifying procurement, Managing Director Dinesh Shahra tells Dilip Kumar Jha. Edited excerpts:

What is Ruchi’s plan for this season?
We are planning to increase capacity utilisation of both crushing units and refineries. Our average crushing capacity utilisation remained 52 per cent last season of the total capacity of 4.1 million tonnes (mt). We plan to increase it by 15-20 per cent this year. Similarly, refining capacity of 2.2 mt is set to achieve an average 70 per cent utilisation from 55-60 per cent last year.

What is your estimate for crush margins?
We are bullish on the crush margins for two reasons. One, a larger crop will mean better capacity utilisation, up 15-20 per cent from last year. Two, the highest ever prices fetched by soy meal, at $550-600 a tonne.

How will you achieve this higher capacity?
More output of soybean would mean more availability for crushing. We have intensified our procurement programme in Madhya Pradesh to have higher bean stock. During the lean crushing season, normally, the unavailability of soybean proves a major hurdle for running the plant. This crop year, we are stocking beans for crushing even during the lean season.

What is your estimate of the soybean crop for 2012?
It should be over 11 mt, a rise of around 10 per cent from the previous year. A better price at the time of sowing and erratic behaviour of the monsoon in the early stages forced farmers to move towards comparatively resistant crops like soybeans and a major shift towards early varieties, which reduce the time exposure to the vagaries of nature. With the monsoon revival, farmers extended sowing, resulting in a 15-20 per cent rise in acreage.

Soybean prices fell 35 per cent between sowing and harvesting. What is the forecast for rest of the season?
Multiple factors affect soybean and oil prices. Hence, it would be too early to forecast bean and oil prices. Besides, there are several international and domestic factors influencing the trends — the ensuing crop in South America, the coming US crop and also other output of oilseeds such as rapeseed, sunflower, etc, change in the import duty in India and export duty in Indonesia and Malaysia, the exchange rate...all these affect the price. Soybean has jumped to Rs 32 a kg now from Rs 24 a kg during the same time last year.

India lags developed countries in average soybean yield. What is the way forward?
Our country undergoes seasonal changes at a much faster pace compared to the developed world. The physiological maturity levels are short in India (60-90 days), which completes the crop cycle very fast. Second, in a good number of areas, soybean is grown as a filler crop due to its short duration and for taking advantage of the monsoon; this also leads to poor inputs and less inter-cultural practices, ending in poor yields.

Lack of research and development in seeds is another problem. The other factors are very low sizes of holdings and the level of mechanisation as compared to other countries. Additionally, we have post harvest losses to blame for less produce.

You had recently announced a Rs 5 a litre price cut for refined soya oil. Do you see room for more such cuts?
We consider reduction in price a healthy trend, as it would reduce inflationary pressure in agro products. The price of soya oil has gone down substantially in the past few months. If availability remains higher than consumption, one can expect a further cut in retail prices.

What else?
Owing to higher prices, the area under soybean has increased in almost all growing states. There is potential for further growth in sowing in Karnataka, UP, Gujarat and Andhra. Soya meal export will increase due to good demand and fair availability.

Any plan to change business strategy, like branded oil to unbranded oil?
We are focusing more on branded products, as they fetch better margins.

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