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Declining soymeal exports could drive fresh play in non GM market: Rabobank

Declining soymeal exports could drive fresh play in non GM market: Rabobank
Source: IRIS | 03 Jun, 2015, 04.22PM


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India's declining soymeal exports could drive a sustainable niche for the country in supplying the global non-genetically modified (GM) market, says Rabobank in its report.

Rabobank Group (Rabobank) is an international full-range financial services provider founded on cooperative principles more than 110 years ago. Headquartered in the Netherlands, the Group's operations include banking, asset management, leasing, insurance and real estate services, serving 8.8 million clients in 40 countries.

The report titled 'Losing Steam: India's Soymeal Exports Are Drying Out' predicts that at the current rate of decline, India's soymeal exports could dry out within five years. However, as exports decline this could also drive a price premium for non GM soymeal (which India is a key supplier of globally) and re-stimulate domestic production of soymeal.

In recent times, strong growth in the animal protein and dairy industries in India, combined with soybean production constraints has led to a sharp decline in Indian soymeal exports.

India is among the most important suppliers of soymeal and corn to South East Asia and also a key supplier of non GM soymeal to Europe and Japan, which are the major markets for non GM soymeal.

Currently about 12% of the world's soymeal production originates from conventional soybeans (non GM) but the actual availability of non GM soymeal at the world markets is much smaller as the beans are often comingled and cannot be separated in the supply chain.

Reduced availability of India's non GM soymeal could therefore create a higher premium for it in the near term, and bring a new market opportunity for India's farmers.

Pawan Kumar, Director, Food & Agribusiness Research & Advisory for Rabobank said, "Soymeal is a vital feed commodity for the animal protein industry and the reducing role of India in soymeal trade is already impacting trade flows globally.

Kumar continued, "Although it is difficult to estimate the exact volume of non GM soymeal available on a global level, India is one of the key contributors.

"India's quickly reducing participation could bring about constraints on non GM soymeal supplies to EU and Japan and generate a higher premium for non GM soymeal in the near term. Higher prices could stimulate more production of soybeans in India - potentially enabling India to carve a sustainable niche in the non GM market," he concluded.

Rabobank's report further highlights that this trend will see South East Asia become more reliant on Latin America to meet its growing need for soymeal as the region's poultry, livestock, and aquaculture industries thrive on the back of rising consumer demand for these products. South East Asia's demand for soymeal is set to grow by 68% by 2020 and traditionally India has been its largest supplier, providing 36% of soymeal imports in 2008.

The Rabobank report further predicts that India’s domestic corn supply, which tripled between 2007 and 2013, will continue to grow at approximately 7% per annum, and continue to play a key role in future feed trade to South East Asia.

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