Amid trade war with US, China may soon open its market for Indian oilmeals

Prior to a ban in 2012, China used to import nearly half a million tonnes of oilmeals from India

China is set to lift the nearly six-year-old ban on import of oilmeals from India to bridge its deficit following reduced supply from the United States due to the ongoing trade war between the two leading world economies.  

Industry sources said that Chinese companies are interested in import of rapeseed meal from India through nearly half a dozen approved Indian exporters, including Adani Wilmar and Ambuja Exports. They added that China's inter-ministerial department, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), has already taken a final decision in this regard. The official notification, however, is yet to be published. 

The opening up of the Chinese market would be a great opportunity for Indian oilmeal exporters. Exports from India were reeling under severe stress due to global economic uncertainty. Used as bird and animal feeds, the demand of oilmeals is interlinked with the economic activity of the importing countries. China, however, is aggressively looking for an alternative market to the US for oilmeals import. 

"The ongoing trade dispute between the US and China has created a lot of uncertainty and forced the latter to look out to other origins for their requirements of soybean and oilmeals. This has compelled China to take a relook at its ban on importing of oilmeals from India since 2012. We understand from the Ministry of Commerce/Export Inspection Council of India that China will lift the ban very soon for import of rapeseed meal from India," said B V Mehta, executive director of the Solvent Extractors' Association (SEA).

Those units that are already approved by AQSIQ will able to resume the export of rapeseed meal to China once notified by the Chinese government. The resumption of export of soybean meal from India to China might take some time as the Chinese AQSIQ team will visit Indian plants for inspection and approval. Prior to the ban in 2012, China used to import nearly half a million tonnes of oilmeals -- 350,000–400,000 tonnes of rapeseed meal and 100,000 tonnes of soybean meal -- from India.  

"This is set to boost India's overall oilmeal exports," said Mehta. China is also interested in importing soybean from India as US sanctions have made the oilseed costlier from there.  

The ongoing trade war between the US and China has created a lot of uncertainty in the global economy. Economic sanctions on Iran, political turbulence in the Middle East and slow economic growth in Europe have reduced demand of oilmeals globally. Consequently, India's oilmeal exports have nosedived by 73 per cent to a mere 81,511 tonnes in September 2018, compared to 298,182 tonnes in the comparable month last year. 

Interestingly, India's oilmeal exports posted a marginal gain of nine per cent for the period between April and September at 1.4 million tonnes for 2018 versus 1.28 million tonnes for the corresponding period last year. 

The export of rapeseed meal, however, has sharply increased to 601,105 tonnes in the first six months, almost double from 300,627 tonnes in the same period last year. They have mainly been exported to South Korea, Vietnam and Thailand.