MANAGEMENT OF DECLINING SOYMEAL TRADE FROM INDIA: AN ANTHROPOCENE PROTEIN

The soybean meal is one of the major foreign exchange earners in the export basket for India due to growth in demand for feeds of bovines, poultry, aqua and swine in Asia and Europe. Currently soybean meal export from India has been declined due to growth in domestic demand, the absence of export orders from traditional buyers, high production cost, intense competition and supply of cheaper soy meal by South America. The macro and micro aspects of the soy meal trade are investigated in the present study. Curative measures to augment the export have been discussed. An attempt has been made to disclose the ground truth that India should focus on the issue of non-GMO and high protein factors for marketing the products in overseas markets like Japan, Korea, Iran, France and Belgium. The countries like Pakistan and Bangladesh, Vietnam have started importing soy seed from India to support domestic processing sector. Exporters from India need to market soymeal products through competitive pricing. The present study envisages the analysis of the soybean meal export keeping the yield, production and export factors into consideration. The study also examines the setup of Soybean meal exports from India and to analyze the factors affecting the Soymeal exports and their implications. The study is directed to suggest measures to improve the export of soybean meal that would definitely contribute to the Indian economy.

Soy meal is fibrous, probiotic, low in fats (Cardio friendly omega-3), rich in Ca, Mg, Fe, Vitamin-12 and Se, containing iso-flavones which reduces risks of various cancers, heart diseases and Osteoporosishttp://www.agrifarming.in/soybean-farming-information. The nutritive stuff is used for bovines, pets, cattle and poultry as feed. Soybean is high yielding in central peninsular India. The USA and Latin America have patronized soybean on a big scale and so it has become world"s favorite oilseed since last two decades Mehta B.V. (2008) [1] .
Indian Soybean meal is non-genetically modified organisms (non-GMO) and internationally popular due to high protein content. The challenges before oilseeds sectors are cheap edible oil import, stagnant and depleted yield, and failure of minimum support price (MSP) to spur growth, phyto-sanitary on health restrictions. The dwindling and under-utilized processing sector has created an imbalance among stakeholders such as protecting producers" v/s seed processors. The consumption and cropping pattern is also influenced by customs duties and differential prices among different oils Reddy et. al., (2009) [2] . India is on a journey from "food security" to "nutrition security" against its exponential population growth. Soybean is gaining importance as vegetable protein diet among the middle class and the soymeal where the end users are the livestock, poultry and aqua fauna. The exponential growth in population as well as poultry has accelerated demand for soybean meal Fig 1(a) and (b). The growth in soy industry would help in boosting export turnover and reduce dependency on imported edible oil resulting in saving precious foreign exchange. The country has a certain competitive advantage in the soy meal export markets like higher protein content, non-GMO produces, logistics and proximity to end-user market. India has achieved export total growth in export (quality and quantity) except for the last few decades. The export of soybean meal occupies a prominent position in the export basket of Agro-Commodities as evident from the Table: 1 The relevance of the Study:-India has an ambitious target for increasing the export doubled after five years as per the Foreign Trade Policy. The oil meals exports had registered a rising trend in both value and quantity from 2005 to 2012. Soybean production stipulated to rise during to 348.44 MMT 2017 against 351.44 MMT in 2016 globally whereas India shall have a fall of 9.1 MMT (2017) against 11.5 MMT in 2016 respectively (IIFL). The decline is expected to fall by 21%. http://businessworld.in/article /India -s-Soybean -Output-May-Fall-22-On-Planting-Area-Cut-Dry-Weather/11-09-2017-125896/ The low demand from Iranian buyers from India is aggravating the trade vulnerability. Indian exporters are presently quoting ≈$405 Soya meal/MT on free-on-board basis whereas, the competitors, Argentina and Brazil are charging nearly $100 less than India. The problem shall further aggravate due to lack of growth in planting area, seed production and productivity, lack of crush margin, underutilized processing capacity and bottlenecks related to transportation, storage and ports facilities.
The present study envisages the analysis of the soybean meal export keeping the yield, production and export factors into consideration. The study also examines the setup of Soybean meal exports from India and to analyze the factors affecting the Soymeal exports and their implications. The study is directed to suggest measures to improve the export of soybean meal that would definitely contribute to the Indian economy. The study aims at providing useful insight into the problem areas and providing probable solutions to the drowning industry. [3] reported the impact of increased soybean production in states of South America and controls soya trade in Argentina and Brazil. He has concluded that 1% increase in South America production reduces the US soybean price by 0.26%. Dwi S. (2005) [4] reported that there is growth in export and production of Soybean oil and meal in the countries like Brazil and Argentina has increased since the 1970s. The export taxes and quotas promote to dampen internal prices and encourage domestic processing, while high tariffs and import controls on agricultural 51 inputs Schnepf et al., (2001) [5] . Pick et. al, (1991) [6] stated that characteristics of international trade in Soybean and Soybean meal are competitive. Deodhar et. al., (1997) [7] opined that Soya meal export market is competitive. Srinivasan (2004) [8] observed that the India oil seed sector is suffering from large unutilized capacity in soybean, lack in the economy of scale and liberal import, the gap between demand and supply and negligence of govt. interest. [4] adopted the New Empirical Industrial Organization (developed by Breshahan T. F. (1982) [9] and lau L. J. (1982) [10] methodology based on estimates of market power indices and hypothesis tests have reported that the price elastic Soybean and Soybean export markets are deemed competitive and rather than behaving as the cournot duopoly. Reddy D. (2008) [11] investigating the Soybean meal (SBM) trade globally by using Growth rate analysis, Markov chain analysis, Auto Regressive Integrated Moving Average Analysis and Co-Integration analysis opined that Growth rate analysis revealed highly significant growth rate. Shurtleff et al 2007 [12], Jadav et al., 2009 [13] reported  [14] have mentioned export of beef, broilers and pork by the US but is retrospective and indirect export of corn and soybean meals. Regunaga M. (2009) [15] studied the soybean chain in Argentina and found that agricultural revolution headed by soy industry has created a favorable climate for economic growth and investment. Reddy (2009) [2] had observed that the oilseeds yield in India has stagnated for the last two decades because of decline in cultivation area, inefficient and underutilized processing vis a vis increase in edible oil import due to a commitment to WTO. Sun Wei et al., (2009) [16] reported that that effect of changes in livestock production are stronger on Soybean meal demand than they are on Soybean demand. Rao et al., (2010) [17] stated that the factors affecting the Soya yield are farmers" holdings, lack of quality consciousness, frequent attack by pests and diseases, marginal environmental land, lack of irrigation, low and uncertain rainfall by Yu Wei in China daily the USA, (2013), http://usa. China daily.com.cn/epaper/2013-08/02/content_16865591.htm reported that the US is the main soybean producer and China is the largest soybean importer (50% international demand). The long run equilibrium shows that the international soybean prices depend negatively on the Yuan vs. Dollar exchange rate and positively on real economic growth of China. The soybean matrix of India and China have deteriorated in spite of developing economies are due to Dollar weakness. Abburi (2010) [18] mentioned about the price linkages between United States and Indian Soybean Markets has significant price relationship between USA and Indian market. Wang Yonggang (2010) [19] observed that there are surplus units in traditional vegetable oil growing areas South Eastern coastal provinces of China with fierce competition. Uri et al., (1993) [20] , (1994) [21] , (2011) [22] reported that 1% increase/decrease in the price of soybeans, meals or oil in the long run results in more than a one percent decrease (increase) in the quantity or soybeans, soybean meal or soybean oil exported". [23] reported that the present and predicted the cost of soybean meal and live cattle have two significant different dynamic correlations.

Methods and methodology:-
The researches undertaken by various scholars, publications, presentations and committee reports on soybean meal were referred. The influence of various market forces including demand supply management, pricing, and consumption on exports of soymeal were investigated. Studies were conducted on exports to specific countries, markets, time periods and comparative analysis of some of the segments. Field visits were conducted to interact with growers, processors, traders, exporters and service providers. The volume of existing research works comment on various factors such as market forces, pricing, competition, government policy, foreign exchange fluxes etc. Exports are not enough to ameliorate the strategy. The demand and supply and consumption and trade data of various oilseeds indicates that Soya seeds are gaining importance in the oilseed basket compared to other oil seeds.
The data of soy seed production, the output of soybean meal, domestic consumption and export of soybean meal from India for about 50 years (1964-2016) were analyzed (Fig. 2). The commodity soy seeds and its derivative products soybean meal made their entry in Indian market between the years 1963-64. But there is significant growth in the production of soy seeds and consumption of soybean meal in the country during 2004-05 to 2013-14. But the trend in the export depleted from 2015 onwards whereas the domestic consumption of soybean meal registered steady growth. There are limited studies on these commercial aspects of the process of export at present which forced to have a rigorous ground level review.

Soy Production India:-
Soy bean is stable Kharif tropical crop of temperate, moist climates, well drained loose and loamy soil as in India with rough and tough care. It needs a temperature 15.50C to germinate and 20 to 25 0 C to grow. Since the climate and soil of MP, Jharkhand and east Gujarat are favourable (Fig 1 C), Soya bean was tried as an alien crop from 1964 and found high yielding. But for last 4 to 5years there is a decline in yield/ export has been considered as a threat to Soya trade. From the Rainfall data of east and west MP it is found that there is a continuous dry spell East and west MP from 2014 onwards. The dry spell, infestation of paste and reduction in cultivated area may be the reasons to have a shortfall in yield, production, processing vis-a-vis export of Soya meal ( China is the largest importer of soy seeds (60%) in the world trade. Argentina with estimated production of 54 million tons of soy seeds which is 18%. The largest exporter of soy product is in the world. USA (108MMT) and controls the world soya trade. The volume of export shipments of Brazil and USA was 76.40 MMT and 52.40 MMT by 2025/26. The production of soy crop is growing in Uruguay due to adoption of certified seeds suiting, favorable ecological environment and modern bio-technology producing mainly due to GMO seeds. Uruguay, Bolivia and Ukrain are exporting 3.0 MMT, 3.3MMT and 4.0MMT soy bean contributing to their foreign exchange earnings. The major chunk of soya produced in Canada is exported to Japan, Southeast Asia, Middle East, and Europe. Soy production in Paraguay is about 10.00 MMT which contribute 3% to global soy seed production and have dominated the export market in European Union, Russia, Egypt, Turkey, Mexico and Brazil.  The share of India in global soybean production in last 3-4 years varies from 3 to 5%. . Present soy seed production is about 11 MMT, producing 9 MMT of Soybean Meal and 2 MMT of Soy Oil. With current capacity utilization is of around 55% the soya sector is facing major concern of underutilization of capacity. Three top processors in India crush nearly 40% of soy seeds available in the market and about 20% Plants run for 300 days indicate underutilization of capacity (Fig -5). (Soybean Processors Association of India, SOPA DIGEST, 2013) .   The Minimum Selling Price (MSP) of soybean has been increased in INR from 900/ quintal to 2560/ quintal (about190%) in the last decade, the influencing factors in the growth in the production of soya seeds. In last few years the MSP is either ruling over the international price of soy meal or close to the globally traded level. This indicates India is totally out priced in the global market in case of soybean meal which is derived from processing soy seeds (Fig -6). The declining trend in the CBOT and FOB prices except the months June-13 and March to June 2014 are due to lack of demand from Iranian buyers from Iran, other domestic and global market conditions (Fig 8).    Global Outlook On Soymeal Trade:-Export tax is a source of revenue generation from agricultural commodities for the country where the producers, the consumers, the end-users, and service providers including the importing country are influenced. During 2002-2015, Argentina imposed heavy export taxes on agricultural commodities and applied export permit system which favored to soya bean production. Other agricultural commodities like corn, wheat and beef were levied higher taxes and no incentive for promoting the product. The soya beam production got a major boost and producers got incentives to produce more soybean. USDA reported that Argentina shall dominate the global soya meal and soya oil export market with 50% share by 2025-26 due to the new policies like the removal of export taxes eliminating its export permit system and lifting its currency control on soya meal and oil.
Brazil would restrict the growth of soy meal exports due to inland rise in poultry and pork sector as per USDA.
Brazil"s soybean crushing capacity is expected to expand at a slower rate due to strong competition from Argentina. It is projected that the share of Brazil in the world soya meal market likely to remain unchanged at 22-24% during the coming decade. The appreciation of USD would render USA origin soy meal uncompetitive in the global market. The share of the USA towards soymeal export is expected to fall from 16% in 2016-17 to about 13% during 2025-26.
EU is expected that the soymeal imports would hover around 19-20 MMT between the year 2016-17 to 2025-26 due to low demand in soybean oil (The food authority in EU), whether made from GMO crops or not. Due to their biotechnology policies and slow approval of GM soya products delays US soybean and soymeal exports into the EU market.
SE Asia and Far-east Asia have accelerated use of soy meal application in poultry and pork sector. The augmented demand, the rise in urban population and rising income level, shifting to nutritional food habits have increased their soy export. South Korea and Japan have limited land availability restricting soy production. So they have lowered import duty on soy meal as rule. USDA projected that SE Asia and Far-East Asia would account for about 50% of the projected world soy meal trade. As a result, EU would be no longer the highest soybean meal importers in future and shall be replaced by countries like Indonesia and Vietnam.
As per USDA annual soybean meal imports, North Africa and the Middle East are projected to rise by 2.4 MMT by 2025-26, accounting for 18% of the rise in world soy trade. Russia"s policies towards augmenting livestock industry, is driving its soy meal imports, which are expected to grow more than 70% from 0.4 MMT to 0.7 MMT by 2025-26. There is a decrease in export of rapeseed meal, groundnut meal and no export of sunflower meal and cotton seed meal. In case of rice bran the increase is 96.70% and for rape seeds the increase amounts to 42.80%.

59
There is an increase of export soy meal (31.5%), rapeseed (21.8%) whereas export of groundnut meal (64.5%) and rice bran (3.2%) was decreased (data F.Y. 2009-10 to 2013-14). Hence soy meal export is the major exchange earner for India. The total export of Soya meal in India is 3.7 to 3.8 MMT when domestic consumption is about 2.5 MMT. Production, domestic consumption and export of hi pro Soya meal and edible grade soya flour is rising (Fig -9)

Preference in export in Soymeal Quality:-
Vietnam is the major market for soybean meal followed by Japan, but, India is losing market share in Korea, Indonesia, and Thailand for India. India is facing competition from Argentina in past but US Soya meal is gaining market due to their competitiveness. However, a discount of Indian meal over US meal is widening on account of quality and perception related issues. The domestic consumption at poultry and meat industry including soybean meal is growing at 10-15%. It is estimated that India"s dependence on export will reduce and in few years soya crop may not keep pace with increasing domestic consumption. Despite protein content of 48% in Indian soya meal and logistical advantage, the Argentina meal with 44% protein is preferred due to consistent quality in SE Asia Chaturvedi, (2009) [24] and SOPA & SEA Website [25] .  36%). There was no crushing parity for the processors due to the higher price of soybean in the domestic market and low realization for oil and meal (Fig 11).

Fluctuation in FOB values of soymeal export:-
The drastic fall in crushing led to drop export of soy meal as India was out priced by cheaper South American soya origin in the global market. India lost market share in major importing countries like Japan, Iran, Thailand, Indonesia, Taiwan [26] . .

Estimated FOB Value of Export (in Million Rupees)
Estimated FOB Value 61 million tons. ASSOCHAM study group reported that the slump in soymeal exports from India is due to faulty speculation and unrealistic approach in handling established export markets. The soybean trade in India is currently at cross roads due to erratic production, declining soymeal exports and idling of plants, poor soy oil output while edible oil imports are growing and is about 60% of the total import requirement. M. P. (India) is known as soybean bowl of India accounting for 60% of the country"s production followed by Maharashtra (30%) and the remaining share of 10% is by States like Rajasthan, A.P., Karnataka, Chhattisgarh and Gujrat. Edible oil intake in India is currently growing at a compound annual growth rate (CAGR) of 3% thereby placing the burden to import to meet current demand/supply gap of 10MT. (ASSOCHAM) Rabo Bank in their report "Losing Steam: India"s Soymeal Exports are Drying Out (2015)" predicted that the current decline in soy meal exports from India, will dry out soya export within five years by 2020. Simultaneously domestic demand for the feed had increased by 12%/year in last decade which may likely to touch about 7 million tons in 2019-20. The soya seed production is projected to touch 10-12 MMT over the next 5 years equivalent to a yield of 7 MMT of feed. India"s export would be 1.2 MMT in the oil seed year beginning from 1 st October and may drop to a negligible level by 2020. In that scenario India would be a negligible exporter in the global market as domestic demand is on rising trend and seed production stagnating.
The demand for meat protein is rising in South-East Asia due to rise in per capita income and change in life style. It is estimated the current soya meal of 13.7 MMT (2013-14) shall . Currently about 12% of the world"s soya meal production originate from conventional soya bean (non-GMO) but the actual availability of non-GMO soya meal is less as the beans are co-mingled and in separable from the supply chain. Fig 14, depicts the export of Soy meal to Iran (both in quantity and value terms). The buyers in Iran exercise a significant influence on the export of Indian soymeal. The abnormal decline in the export to Iran from 1.135 MMT in 2013 to 0.141 MMT during 2014 (90% decline) has worsened the export. The Rupee Dollar parity is hovering (60-63) at present. This is due to Iran has increased purchases from Brazil and Argentina after trade sanctions over Tehran under the disputed nuclear programme in late 2013.

Export of soymeal to Iran:-
A landmark deal stuck in Nov., 2013 eased some of the sanctions on trade with Iran that had slashed. The OPEC member"s oil exports and narrowed its options for securing food and agricultural goods to a few countries. The sanctions had forced India to trim oil purchases from Iran, but it remained a loyal and large customer. In 2012 as sanctions stalled dollar payments, it started settling part of its oil debt in rupees and Iran was using those to buy 62 goods from India. That rupee-trade gave India an edge over other soybean meal suppliers such as Argentina and Brazil, quickly allowing the South Asian country to establish a near-monopoly in exports. Reuter, Friday, 26 th September, (2014). Quoting "Reuter, on 15 th july 2015", "How the Iran Nuclear Deal Will Help and Hinder Indian Exporters" stated that exports of soybean meal purchased by Iran from India, could face a setback as the lifting of sanctions to allow Iran to shift to procure soymeal from India other than South American who is supplying at lower prices (Mehta B.V. [1] , ED, SEA) But India have the advantage of quick deliveries by small cargoes due to close proximity. The Economic Times: on 15 th July 2015, reported that the decline in major exportable items started after indications of the Iran nuclear agreement in November 2013. The government support price in India is above the world market and farmers haven"t been selling beans for processing. it is quoted "India is totally out-priced and the world is really not looking at India as a regular or genuine supplier now," as per Chaturvedi Atul, a chief executive officer of Adani Wilmar Ltd.. As per Jain Davish, a decline in freight rates because of the slump in oil prices made supplies from Latin America cheaper. Fig-15 provides details port-wise export of Soybean meal from West Coast and East Coast. It can be concluded that ports like Kandla and Mumbai/JNPT handle the bulk of export cargo with private ports like Mundra and Hazira coming second in export cargo handling. But the volume of exports from ports like Bedi, Bhavnagar, Pipava and Porbunder in the West Coast and Vizag and Kakinada in the East Coast is not very significant for the last few years (Fig 15). Soymeal is highly essential. 2. Discouraging import of finished products instead of raw materials (crude oils) through tariff alignments is needed. 3. Soybean Meal and its value added product exporters should be charged with low interest rates against export credit to provide level playing field as current interest is high. 4. Indian processors find shortage of raw materials for manufacturing 100TMT of non GMO soya seeds annually for export. For larger interest export of soybean seed should be prohibited. 5. Since enough SBM is available to meet the total domestic requirement of Poultry, Aqua fauna, Fisheries, permitting import of SBM is really unjustified. Genetically Modified Soybean Meal should not be exported as Non GMO, which shall lose its credential as non GMO exporter. 6. Looking to the worldwide interest reduction in past 3 years, interest subvention in export credit should be granted to soymeal of India. 7. Soy processors need to embrace new technology and enhance cost effective operational efficiency to be shifted to domestic business and move to Value Added Products at a lower Tariff rate. 8. Long terms contracts with the processors directly will help in better quality products and timely supplies. Stress on the need to pay a higher price for the better quality product shall ultimately result in cost saving.

Conclusion:-
India is facing the problem of low yield, low cropping area, unscientific crop practices, excess processing capacity, and infrastructural bottlenecks. The soy industry demands restructuring, modern technology infusion, high-yield and disease-resistant seeds, mechanization and improved crop practices, the building of infrastructure, investment in R&D in soymeal sector. Export activities require relation and coordination involved like production, procurement, quality control, infrastructure, transportation, the linkage between growing region and port area, port facilities, banking service, berthing and loading of vessels etc.
The farmers of MP, Gujarat and Rajasthan are below the minimum support price for the Soybean Seed. The Trade Associations have urged the Govt. to step in to resolve the matter so that farmers should get adequate returns to keep them in soya cultivation and trade. In the fluctuating market there should be an inbuilt system where the producers are guaranteed an adequate return and simultaneously the processors are assured of a steady supply of oil seeds for crushing. The proposal of importing Soya seeds for processing (preferably non-GMO) as being done by some countries like Vietnam, Indonesia, Bangladesh and Pakistan can be worked out. The imported quantity would meet the shortfall and utilize the unutilized processing capacity and ensure supply of Soybean meal round the year.
India can achieve large scale increase both production and processing of Soya seeds by applying modern technology to deliver consistent quality cargo as per buyer"s requirement and improved farm practices in other states like Odisha, Bihar and Chhattisgarh.
The entire process of storage, transportation and handling/loading of export cargo is to mechanized and scientific. Imposition is to be made to eliminate contamination and other spurious matters in the shipped cargo. 64 It is evident from falling level of export turn over in the last few years that India is out priced by South American countries in Global market. To recapture the market share Govt. should intervene immediately and provide a subsidy to support the exporters in regaining the traditional market.
Iran has considerable influence over Indian exporters of Soymeal as they source from India due to Western sanctions. After easing of sanctions Iran buyers are sourcing their requirement from cheaper origins. India should immediately take corrective steps and supply Hipro material to gain the confidence of Iranian buyers.
The buyers in traditional markets viz., Japan, Korea, Vietnam, Thailand and Indonesia to be cultivated about the superior quality of Soybean meal which is non-GMO especially the Japan and Korean market, India has to focus as they emphasize on the non-GMO Soybean meal.
Apart from Govt. intervention, the trade bodies, The Soybean Processor Association (SOPA) and the Solvent Extractors Association (SEA) can devise a strategy for the transparent and free flow of market information among the members for working out export transactions for the common benefit. The further intensive study is needed to rejuvenate the soy sector for the overall development of the national economy.
These trade bodies can take up the issue of anomalies in present GST structure where the Centre has exempted deoiled cakes under GST but there are issues of claiming full credit for the input tax paid on the oilseeds by the solvent extraction units. These anomalies may result in a rise in domestic prices of soy meal and ultimately affecting already declining volume of exports.(Source: Business Line dated 13.07.2017)