India's Approval for Soymeal Imports - A Timely Decision by Government

Soymeal prices have increased to an unprecedented high in the country. There has been a massive price escalation in soybean (which is processed to produce soymeal) because of acute shortage of soybean in the supply line. The price rise was considered to be unsustainable by the industry and it was adversely affecting the small poultry farmers in context to weakening demand and high risk.

Most of these farmers were not placing new chicks in the farms. Therefore the decision by the government to allow imports to cool down the prices and save the livestock farmers seems to be appropriate. The shortage in domestic feed availability has contributed to surging soymeal prices, eventually damaging the livestock, poultry and aquaculture industries since higher feed prices resulted in squeezing of the production margins.

Domestic prices of soybean, which is the source for obtaining soybean meal, have doubled in a year to Rs 81,000 per tonne from Rs 36,420 per tonne. However, the global soybean and soybean meal prices are not more than 50 percent of the Indian offers. The Indian government has now allowed import of up to 1.5 million metric tons (MMT) of foreign-origin soybean meal (including that derived from GE-soybeans) at a 16.5 percent basic customs duty.

In a recent release, the USDA had reported that the 2021 southwest monsoon has also contributed to price volatility with heavy rains in the soybean production states fuelling further speculation about bean yields and meal availability in the upcoming marketing year 2021/2022.

India’s domestic soybean crop will not be harvested until October 2021, with crush and meal production not anticipated until mid-month. As a result the supplies were going to tighten further. In all, it is a timely decision by the government to check the price rise and improve the poultry/livestock business in the country.

The burden of rising feed costs is being passed onto Indian consumers in the form of increased domestic poultry prices, reaching $3.50 per kilogram, and higher egg prices ($0.07 per egg). As a result India’s poultry feed industry was forced to petition the Indian government for relief, seeking authorization to import soybean meal derived from genetically engineered (GE) soybeans.

Consumption of animal feed consumption is high, because of the large-scale production of livestock products (which are demanded largely in the exports market). After the notification, Indian buyers have started negotiating for importing soybean meal from neighboring countries like Bangladesh, Vietnam, and also for transshipments from the United States and other distant origins. There is a critical shortage of animal feed protein in the country.