The industry saw a 37% decline in oil meals exports, with the current value standing at Rs 5,600 crore. The reason behind the sharp downfall is the reducing overseas shipment of oil meals.
In a recent statement, the Solvent Extractor’s Association of India (SEA) reported that India saw a sharp fall in the export of oil meals by 36% in the last fiscal year. It was 23.73 lakh tonnes in quantity, whose value accounts for about Rs 56,000 crore. Lower sales of soybean meal in the international market have led to a sharp decline in value. SEA also stated to the Business Standard that the overseas sale of oil meals saw a sharp decline to 2,42,043 tonnes in March 2022, compared to the sale in March 2021, which was 3,22,850 tonnes. Sales fell by 25 percent in 2022 compared to 2021.
Multiple factors to blame
India saw a steep decline in the sales of oil meals in the past twelve months. The value of oil meal exports declined to Rs 5,600 crore in the fiscal year 2022 from Rs 8,866 crore in 2021. It severely hit sales in the 2022 fiscal year. Several factors are behind the sharp fall in overseas sales of oil meals.
Reduced overseas shipment of soybean meal
In the 2022 fiscal year, India saw a reduced export of soybean meal. As compared to the previous fiscal year, India shipped close to 24% less in FY22. Exports of soybean meal saw a sharp fall from 15,64,833 tonnes in 2021 to a meager 3,72,740 tonnes in 2022. The plunging difference has taken a toll on the sales of oil meals.
High price expectations of farmers
Farmers stocking up on oil meals is another major factor in the decrease in sales. SEA stated that farmers are holding stocks as they expect prices to rise in the future, as it happened in the previous year. As pers Business standard, this hoarding has caused overly priced soybean meal for exports. Currently, soybean meal has a rate of US$840 per tonne as quoted at the Kandla port.
High competition in the international market
Several of the oil meal-producing countries are selling their produce at a marginal price. The rate of soybean meal exports from India is high as compared to US$574 per tonne from Brazil and US$586 per tonne from Argentina. Due to the high price of soybean meal in the domestic market, India competing for exports seems improbable any time soon.
India is importing more than it is exporting
India has seen a sharp rise in the import of oil meals in the 2022 fiscal year. As there are a lesser amount of oil meals present in the domestic market, India is relying on imports to fulfill its oil meal demands. Since farmers are holding stocks in anticipation of a price hike, it has forced an increase in the import of crude soybean oil. India exported around 2,25,000 tonnes of organic soybean meal to the USA in 2020-21 compared to only 65,000 tonnes in 2021-22.
Declining demand for Indian oil meals
Soybean oil from India has always had a high demand in the European market due to its non-genetically modified nature. But demand declined, and India exported just 1.2 lakh tonnes in FY22 as compared to 5 lakh tonnes in FY21.
The export of rapeseed meals also saw a sharp fall in FY22. Export of rapeseed meal was 11,13,021 tonnes in 2020-21, but it declined to 866,407 tonnes in 2021-22. Countries like South Korea, Thailand, Vietnam, and Bangladesh reduced their import from India, which caused the decline.
India’s declining oil meal exports have caused a huge dip in overall revenue in the 2022 fiscal year. Reduced exports in the overseas market, farmers holding stocks, and declining demand for oil meals from India are major reasons for the sharp fall. The situation does not seem to get better as long as the prices in the domestic market improve.