Few major agro-based industries in India have gone through the turmoil that soybean has in recent times.
In 2012-13 and 2013-14 (fiscal years ending March), export of meal, cake and other solid residues obtained after extraction of oil from soybean stood at 44.84 lakh tonnes (lt) and 39.23 lt, valued at Rs 13,357.49 crore and Rs 13,246.29 crore, respectively. But in the subsequent two fiscals, these collapsed to 13.73 lt (Rs 4,515.34 crore) and 3.55 lt (Rs 1,279.30 crore), respectively.
The same period has, moreover, also seen a surge in imports of soybean oil into the country — from 11.23 lt (Rs 7,611.61 crore) in 2012-13 and 13.45 lt (Rs 8,308.08 crore) in 2013-14 to 23.17 lt (Rs 12,910.93 crore) in 2014-15 and 39.65 lt (Rs 19,428 crore) in 2015-16. This double whammy, from meal/cake export shipments plunging to below a tenth and oil imports soaring 3.5 times over their levels three years ago, has hit both soyabean processors and farmers hard.
“In the 2011-12 and 2012-13 oil years (October-September), our units crushed 105.16 lt and 101.21 lt of soybean, respectively. This fell to 81.26 lt in 2013-14 and 68 lt in 2014-15, and we expect it to drop further to 59 lt in the current oil year. At this rate, there will be no industry left,” says Davish Jain, chairman of the Indore-based Soybean Processors Association of India (SOPA).
He blames the situation mainly on large-scale oil imports: “Wholesale prices of refined soybean oil in Indore averaged Rs 69,984 per tonne in 2012 and Rs 67,808 in 2013, but in the last two years, they have been ruling at about Rs 62,000 per tonne. In 2011-12 (oil year), we produced 18.93 lt of soybean oil and imported 10.79 lt. This year, we would probably produce 10.6 lt of oil and import over 50 lt”.
For every 100 kg of soybean crushed, processors produce roughly 18 kg of oil. The balance 82 kg comprises protein-rich cake, meal and other solid extractions. Till over a couple of years ago, 40-42 per cent of the extraction produced was being exported.
The ratio of realisation from soybean crushing between meal and oil used to be 55:45. That has now changed to 72:28 because of falling oil prices. And lower realisations from oil has made it difficult to export our meal at competitive rates, especially when the latter prices (free-on-board, Indian ports) have dipped to around $415 per tonne from $ 550-600 levels three years ago,” notes Jain.
The ultimate sufferer has been the farmer. From Rs 4,000-plus per quintal two years ago, prices of soybean at Indore mandi have come down to Rs 3,100-3,200. With a good monsoon this year, there could be further pressure on prices in the months ahead.
SOPA has sought a tariff rate quota regime, under which the current 12.5 per cent customs duty on crude de-gummed soybean oil would be applicable only on imports of up to 10 lt. Imports beyond this quota can attract a higher 45 per cent duty, which is also the ‘bound’ tariff rate that India can charge under the World Trade Organization agreement. “If domestic realisations on soybean oil improve, we will be able to competitively price our meal for exports. This will benefit the industry and farmers, besides turning our soybean sector into a net foreign exchange earner, which it was until three years back,” adds Jain.
Soybean was grown in 11.63 million hectares (mh) in India last year, with Madhya Pradesh (5.91 mh), Maharashtra (3.77 mh) and Rajasthan (1.10 mh) being the main cultivating states.