Good Seeds Have Lifted Soybean Yield

Business Standard: What is the soyabean crop scenario in the new season?

Dinesh Shahra: India's 1997-98 soyabeans crop is the highest ever at 5.3 million tonnes. This is the result of acreage going up as also higher input of improved seed and fertilisers on account of higher prices received by farmers in 1996-97.

Timely rains helped increase the yield. The crop in 1995-96 was 4.3 million tonnes and in 1996-97 it was 4 million tonnes.

The average yield has gone up to 955 kgs per hectare from 880 kgs last year. The acreage for 1997-98 is estimated at 5.5 million hectares, up from 5 million in 1996-97.

 

B S: How will this comfortable crop situation reflect on the soya industry?

D S: The industry should do better than in 1996-97, since the plants have 25 per cent extra seeds to crush and thus can run for a longer period in the season which commences from October-end.

However, the capacities in the industry are much higher, and most of the plants will run for about four to five months, with processing levels coming down thereafter to about 30 per cent.

Prices of seed, though lower than 1996-97, are not as low as expected from a crop of this size. This is because the regular flow of seed during end October and beginning November has been slowed down by unseasonable rains.

Internationally, Indian soyameal exporters should see good business till the time the next Brazil and Argentine crops come into the market in April/May 1998.

In case Brazil and Argentina come in with good crops, the world market will return to a situation where the supplies are easily available, keeping in view the large US crop of 74 million mts., harvesting of which is mostly complete.

As far as the other products of soyabean processing ie., soyabean oil, prices are ruling at reasonable levels for the consumer, given the large quantity of imports of palmolein and other edible oils earlier in the year.

Unlike the last one year, international oil prices are currently ruling at levels higher than in India, and Indian prices should rise to match import prices, once a major part of the kharif oilseeds are used up.

In general all soya processing units, which can procure soya seeds efficiently in adequate quantity so as to ensure better plant utilisation over the year, should do well.

Fully integrated plant producing value added soya products such as refined oilseed vanaspati and edible soya products with a degree of brand marketing for such products stand a better chance of doing well.

B S: The soya industry at present is facing 'excess capacity'. How was such a situation created?

D S: The solvent extraction industry in India depends on raw material produced seasonally. The soya sector, located for the most part in Madhya Pradesh runs for 4 to 6 months on average. Each year new plants are set up, while a few fall sick. Setting up of plants in excess of capacity justified by the available seeds depends on the profitability projections of the promoters, who probably feel that they can reach break-even in the 4-6 months that the plant runs with full capacity utilisation. In good years this is the case, but only the financially healthy companies can survive the bad patches in between.

India has become a net importer of edibles oils and there is sufficient market for export of oilmeals. The capacity created so far can be usefully utilised if the quantity off seed produced within the country can be increased by increase of inputs to improve yields. India's yields are still less than a tonne per hectare while in USA/Brazil/Argentina the average is above two tonnes. The other alternative is to import soyaseeds.

B S: What is scope for the import of soyabean seeds and why are import necessary?

DS: The Ind-ian government is under increasing pressure to import agri products now falling under import restrictions from WTO members.

Internally, the solvent extraction industry has time and again requested the Indian government to permit import of seeds so as to run the industry more economically for greater lengths of time.

This is more so since oil is now freely permitted to be imported, and in most years the value of oil is half the value of seed, for soyabeans, with the meal being re-exported, which means no additional foreign exchange outgo is involved.

Neither is the interest of Indian farmers affected, since the limiting factor for seed imports is the quantity of oil that can be sold in a competitive market.

The market forces will ensure that imports take place only to the extent that domestic production falls short of the crushing industry's requirements.

B S: What is the exact position of the export of Indian soyameal as of today?

D S: Indian soyameal has a higher protein content than North/South American meal and also enjoys a freight advantage to Asian countries. There is thus no difficulty in exporting all that is produced.

The export of soyameal this year is expected to be over 3 million tonnes valued at about Rs 2,800 crores. While domestic consumption is growing this is still less than 500,000 mt.

One of the constraints faced is that of transport and port infrastructure, which if improved to international standards can result in a more profitable industry and greater returns to farmers.

B S: What have you to say on the government's edible oil import policy.

D S: The government liberalisation of imports of edible oils has successfully led to freer availability of all edible oils in the Indian market at stable prices.

In the last two years price fluctuation have been less than in earlier years. The import duty should be reduced to permit Indian prices to be more in line with international prices.

This will help Indian export whenever surpluses arise in a particular oil anytime in the future. Internationally most countries import seed, oil and meal depending on the relative economics.

India should also do the same and permit import of seed, so as to allow Indian crushers to take advantage of their processing capacities