Financial Daily from THE HINDU group of publications
Friday, Nov 07, 2003
Agri-Biz & Commodities
`Higher soya prices will motivate farmers'
Mumbai , Nov. 6
UNSTEADY soyabean production and falling soyameal exports in recent years have enervated the once vibrant processing industry. Competition from low-priced imported soyabean oil is also eating into the already fragile trade margins.
However, with the ongoing harvest of a bumper crop of soyabean, (estimated by the government at a record 71 lakh tonne, but some 10 per cent lower by private forecasters) the industry is looking forward to a really big season.
International market conditions too have turned favourable for soyameal exports because of weather-induced setback to the American crop. The time could not have been more propitious for the Indore-based Soyabean Processors Association of India (SOPA) to celebrate its silver jubilee year. Mr Rajesh Agrawal, SOPA, Chairman, in an exclusive interview to Business Line expressed tremendous optimism about the future of the soyabean processing industry, in both short and medium run.
Congratulations to SOPA on its silver jubilee year. What are the implications of the current harvest of large domestic soyabean crop on the processing industry?
This year's soyabean crop would improve capacity utilisation of the processing units to over 70 per cent from the low 35-40 per cent of recent years. Most plants will operate for nearly 10 months this season.
Fortunately, despite a large crop, farmers are realising remunerative prices, well over Rs 12,500 a tonne. This will encourage them to increase acreage next season. Another dimension is the productivity increase due to timely and well-distributed rainfall, even though fertilizer consumption was lower.
High prices this year will motivate farmers to adopt better agronomic practices next season.
How is soyameal export performance going to be?
Soyabean extraction export scenario is very positive. With lower US crop and higher prices for Indian meal, marketing will not be a problem at all. There is scope for a further increase in price as, I believe, Indian meal is under-priced today by $10 a tonne as compared with other origins. Demand from South-East Asian destinations is good and we have a freight advantage because of geographic proximity as compared with the US and South America. India will ship out over 30 lakh tonne of soyameal this year as compared with 14 lakh tonne last year.
What about domestic demand?
Consumption is definitely on the rise in the local market at about 10 per cent per annum. However, this year, high prices of soyameal will result in diversion of domestic demand to groundnut meal and other meals. Indian meal consumption will be around 15 lakh tonne this year. SOPA is focused on meal quality improvement and is continuously promoting meal consumption.
What are your views on soyabean import? Do you favour introduction of genetically-modified (GM) soyabean in India?
We do not favour import of soyabean as it would be against the long-term interest of Indian soyabean sector as a whole. Imports would not only discourage growers, but will have adverse long-term repercussions on the industry and other stakeholders. In any case, soyabean imports are not commercially viable at present. We have an open mind on the subject of genetically-modified soyabean. It has to be studied thoroughly by experts before it is recommended for introduction in the country.
What is SOPA's role in soyabean crop promotion?
We have undertaken 100 Front Line Demonstrations plots of one acre each at farmers' field under real farming conditions. We have provided good quality seeds of various varieties as also fertilizer and other inputs. The results have been very encouraging. Average yield achieved was 2-3 tonne a hectare. If we can achieve world average yield under our domestic conditions, why should GM-soyabean be introduced in a hurry? It will impose limitations in marketing (currently India enjoys non-GM producer status) and increase the cost of production.
What is SOPA's strategy to become globally competitive? And how do you see the industry's future?
In order to be globally competitive, the primary condition is to improve our yield from the present 1,000 kg per hectare to at least 2,000 kg/ha. and increase the efficiency of processing plants. SOPA's major task is to work towards increasing both production and productivity.
We are confident that Indian soyabean output can touch the magic figure of over 100 lakh tonne within next 2-3 years. The industry's profitability and respectability will once again rise. India's negotiations at the WTO should ensure protection to Indian farmers. With right policy prescriptions, we can accomplish our aim of becoming self-sufficient in oilseeds by the year 2020.
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