India, China need soya diplomacy
October 5, 2010

Here’s another huge anomaly between China and India – Vital for both its oil and residue animal meal, astronomic soya demand from China is pushing global sales and prices of the commodity up. Sales jumped 60 percent to 1.738 million metric tons in the week ended Sept. 23, compared with 1.084 million a week earlier, the U.S. Department of Agriculture said in a report. China, now the biggest consumer, bought 75 percent of the total. Soybean prices are up 19 percent from a year ago.

India in contrast produces huge quantities of soya, however is banned from exporting to China as China only imports the full bean, preferring to crush the soya for oil and animal feed itself. New Delhi meanwhile has banned the export of the full bean. This poses a problem for both China and India, where simple co-operation can solve high soya demand in China and revive soya cultivation in India.

As a result, of not being able to export the full bean or oil, Indian soya farmers, concentrated in Central India are struggling with selling soya feed to the handful of nations that have a substantial poultry and dairy industry, but can’t be bothered to crush the beans. That limits its options — and bean profitability. Obviously, until returns from oil and meal add up to more than the cost of buying and processing a bean, no mill owner will touch it. To multiply the Indian farmers woes, when it comes to animal feed, soya competes with cottonseed and rapeseed meals which are also plentiful.

The governments of India and China need to realize this gaping issue between Chinese demand in soya and Indian production. Being neighbours, it would benefit both our markets if India and China could come to an agreement on solving each others’ soya woes. If China could import soya from India, it would drastically reduce delivery time and costs as most of Chinese soya is imported from the US and Europe. In turn, India’s farmers would have a continued sustainable commodity to grow. According to China’s Ministry of Commerce, soybean imports may surge 79 percent year on year to 4.91 million metric tons in this month.The figure reflects a 2.94 percent increase from the 4.77 million metric tons imported in August.

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