Commodities

India yet to gain from US-China standoff

Vishwanath Kulkarni Ahmedabad/Bengaluru | Updated on March 26, 2019

India’s image of an unreliable supplier in the world market hits prospects, say sources

Contrary to expectations, Indian farm commodity exporters have not benefited from the ongoing trade war between the United States and China.

Key commodities such as soybean seeds or oilcake and rapeseed oilcake, which had genuine prospects to replace US supplies, found no attention in China . In the case of soybean, China preferred imports from Argentina and Brazil to sourcing it from India . Sources said India’s image of an unreliable supplier in the world market could be the reason for China turning to the South American producers .

The Soybean Processors Association of India (SOPA), the apex trade body of the oilseed producer in Central India, has expressed disappointment over the missed opportunity .

“China usually buys soybean. And amid trade tensions with the US, it could have turned to India, but they (China) didn’t open it, instead it is procuring from Argentina,” said a SOPA official.

The Solvent Extractors’ Association (SEA) had earlier stated that resumption of soybean meal exports to China could take longer due to pending inspection and approval of the units by Chinese authorities.

Even in the case of rapeseed oil cake, the orders are not forthcoming. BV Mehta, executive director, SEA said, “There is no known reason why China is not allowing imports of rapeseed oilcakes from India. Already, five of the factories were inspected and approved by the Chinese authorities. But they have still not allowed any shipment. They have not given any reason for not allowing shipments despite companies showing readiness to start the shipments.”

Major edible oil players, including Adani Group and Gujarat Ambuja Exports, are reportedly making efforts to begin shipments to China.

In the past few months, several feelers were given to the trade that China will resume the import of rapeseed meal from India. It was believed that units that were approved by General Administration of Customs of the People’s Republic of China would be able to resume the export once their registrations with Chinese Ministry of Agriculture (MoA) was done. But there is no breakthrough yet .

Prior to ban in 2012, China used to import nearly half a million tonnes of oilmeals (rapeseed meal 3.5 to 4 lakh tonnes and 1 lakh tonnes of soybean ) from India.

“If the ban is revoked, there is an immediate possibility of at least 2 lakh tonnes of rapeseed meal exports to China,” said Mehta.

“Exports have become a residual issue. When we have surplus production, we look at the international markets. Otherwise, we don’t see production as part of export strategy. If international markets was part of our strategy, then potential importers would have relied on us. We need to factor in international markets as a strategy,” said Biswajit Dhar, Professor, Centre for Economic Studies and Planning at JNU.

According to cotton stakeholders, China possesses an important place in the cotton exports from India. Bangladeshhas bought about 10 lakh bales (each of 170 kg) so far this season (October 2018-September 2019) .Exports to China is reported at about 8 lakh bales. Rising prices of the fibre crop in the domestic markets slowed down the exports.

“Cotton prices have shot up sharply in the past fortnight and due to higher prices, export contracts have taken a halt,” said Atul Ganatra, President, Cotton Association of India (CAI).

Also the diplomatic initiative launched by the Modi Government to push shipments of Indian rice has not paid off. Sources said China has preferred to source its white rice requirement from Pakistan because of the cost advantage. In addition to the lower costs, the exporters from Pakistan have a 5 per cent duty advantage while shipping to China.

The Indian rice has turned expensive in the world market after the Centre increased the MSP for paddy this year.

Published on March 26, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like