International Trade: Soybean


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1. Trends in the Global Trade of Soybean Oil
2. Global Pattern in Production and Consumption of Soybean Oil
3. Production and Consumption Trend in India
4. Major Exporters and Importers
5. Policy and Procedure governing import of soybean oil
6. Import Planning of Soybean Oil for Indian Markets

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International Trade: Soybean

  1. 1. • Dhruba Jyoti Chatterjee 11C• Hasan Nayyar 16C• Jasmit Singh Chawla 19C• Kapish Kaushal 20C• Shashwat Sinha 41C• Surjodeb Sarkar 44C
  2. 2. CONTENTS1. Trends in the global trade of soyabean oil2. Global Pattern in Production of Soyabean Oil3. Global Pattern in Consumption of Soyabean Oil4. Production Trend in India5. Consumption Trend in India6. Major Exporters of Soyabean • United States • Decline of United States and Rise of Brazil and Argentina7. Major Importers of Soyabean Oil • China • India • EU8. Policy and Procedure governing import of soyabean oil9. Import planning of soyabean oil for Indian markets10. Challenges • SCM/Warehousing Challenges • Financial Challenges • Marketing Challenges • PFA (Prevention of Food Adulteration Act)
  3. 3. TRENDS IN THE GLOBAL TRADE OF SOYABEAN OILThe soyabean oil trade is on the rise after a fall in 2008-09 due to a drop in price courtesy ofthe poor demand prevailing then. The total soyabean oil production increased rapidly andcrossing over 42 million tons annually as of 2011. China continued to be the largest producerof the world with a total share in world production of around 24% followed by the UnitedStates, Argentina and Brazil. India stands 5th in the World production of soyabean.China is the largest consumer of Soybean Oil and consumes 27% of the global productionfollowed by United States which consumes 18% followed by Brazil which consumes 12%.India is the fifth largest consumer of Soybean Oil and consumes 6% of the global production.Now focussing on India, The major soya bean producing areas are Madhya Pradesh,Himachal Pradesh, Uttarakhand and the Khasi and Naga Hills in the Eastern Indian states.The annual production of soya is on the rise, and has seen a 4 fold increase in the yields overthe past two decades. However, the annual consumption of soya bean has outstripped thepace of production requiring India to import the commodity.United States currently stands as the leading exporter of soya bean with more than 45% sharein the World’s exports followed by the two South American nations Brazil and Argentina.China doesn’t feature in the top three because of its high domestic consumption, which leadsto very little being left for export of the commodity. However, a growing trend in the exportof the commodity that is likely to be observed is the South American nations overtaking theNorth American ones. The flag bearers of this increase are likely to be Brazil and Argentina.China stands as the largest importer of soyabean oil. The rapid growth of Chinas economyhas spurred food consumption and Chinas WTO accession has reduced import tariffs andquantitative restrictions to its oilseed market. EU and India are the other big importers of thiscommodity.
  4. 4. Global Pattern in Production and Consumption of Soybean OilProductionThe largest producer of Soybean Oil in the world is China which produces more than tenmillion tons of Soybean Oil annually followed by United States of America and Argentinaproducing over 8.5 million tons and 7.5 million tons respectively. India is the fifth largestproducer of Soybean Oil and produces over 1.7 million tons annually as of 2011. Soybean Oil World Production 14000 Thousand Metric Tons 12000 10000 8000 2007/08 6000 2008/09 4000 2009/10 2000 2010/11 0 Nov 2011/12 Dec 2011/12 CountrySource: Soybean production is on the rise after a drop in production in 2008-09 due to drop inprices due to poor demand with the total Soybean Oil production over 42 million tonsannually as of 2011. Total Soybean Oil Production 44000 42000 Thousand Metric Tons 40000 38000 36000 34000 32000 2007/08 2008/09 2009/10 2010/11 Nov Dec 2011/12 2011/12 Year Source:
  5. 5. China produces 24% of the world Soybean Oil followed by United States at 19% andArgentina at 17%. India produces 4% of the Total Soybean Oil production in the world. World Soybean Oil Production 1% 10% 4% Country / Year 4% China 5% 24% United States Argentina Brazil 16% EU-27 India 19% Mexico 17% OtherSource: is the largest Soybean Oil Consumer in the world consuming over 12 million tonsannually which is more than it produces leading to net imports of over 1.4 million tonsannually. The Second largest consumer is United States consuming over 8 million tonsfollowed by Brazil at over 5 million tons. India is the fifth largest consumer of Soybean Oilconsuming over 2.7 million tons which is more than it produces leading to net imports ofabout 850 thousand tons of Soybean Oil annually. Soybean Oil World Consumption 14000 Thousand Metric Tons 12000 10000 8000 2007/08 6000 2008/09 4000 2000 2009/10 0 2010/11 Egypt Argentina Morocco China United States Mexico Algeria Other Brazil EU-27 Japan Bangladesh India Korea South Iran Taiwan Nov 2011/12 Dec 2011/12 Country
  6. 6. Global Soybean consumption is on the rise after a drop in consumption in 2008-09 due todrop in production due to poor demand with the total Soybean Oil production over 42 milliontons annually as of 2011. Total Soybean Oil Consumption 44000 Thousand Metric Tons 42000 40000 38000 36000 34000 32000 2007/08 2008/09 2009/10 2010/11 Nov 2011 2011/12 YearSource: is the largest consumer of Soybean Oil and consumes 27% of the global productionfollowed by United States which consumes 18% followed by Brazil which consumes 12%.India is the fifth largest consumer of Soybean Oil and consumes 6% of the global production. World Soybean Oil Consumption 1% 1% 1% 1% Country / Year 1% 1% 10% 4% China 2% United States 2% 2% 27% Brazil 6% Argentina 6% India 6% EU-27 18% 12% Egypt MexicoSource:
  7. 7. Import Procedure & Strategy of Soya-bean oil (1507) and its fractions,whether or not refined, but not chemically modifiedProduction & Consumption Trends of Soya-bean Oil in India from 1990 to 2010:India is the 5th largest producer of Soya bean oil in the world, following countries like China,Brazil, USA and Argentina. The major Soya bean producing areas in India are Madhya Pradesh,Himachal Pradesh, Uttarakhand and the Khasi and Naga Hills in the Eastern Indian states.Source: Indexmundi (United States Department of Agriculture)The annual production of Soya bean in India from 1990 onwards has been graphically plottedwhich shows an increasing trend, more than a 4-fold rise in the yields in the past 2 decades.Soya bean being a Kharif crop is usually sown in June in India. In some states, it is cultivatedtwice a year. The harvesting period for soya bean comes around September to October. It ishighly dependent on monsoons, and any change in the rainfall pattern affects the production ofsoya bean significantly.
  8. 8. Year Production (1000 MT) 1990 425 1991 400 1992 500 1993 650 1994 495 1995 712 1996 657 1997 859 1998 972 1999 774 2000 805 2001 833 2002 607 2003 1004 2004 810 2005 1239 2006 1157 2007 1499 2008 1287 2009 1340 2010 1715Source: Indexmundi (United States Department of Agriculture)
  9. 9. Year Domestic Consumption (1000 MT) 1990 445 1991 425 1992 562 1993 711 1994 555 1995 772 1996 706 1997 1095 1998 1805 1999 1564 2000 2080 2001 2231 2002 1910 2003 1942 2004 2737 2005 3000 2006 2500 2007 2330 2008 2300 2009 2810 2010 2650As Domestic industrial consumption is very low, the domestic food consumption is a goodmeasure of the total consumption in India. India ranks 5th in Soya Bean Oil consumption in theworld as well.The annual consumption of Soya bean in India from 1990 onwards has also been graphicallyplotted which again shows an increasing trend, but a more than 5-fold rise in the demand in thepast 2 decades, hence creating a need to import the crop to meet the rapidly increasing domesticdemands.
  10. 10. MAJOR EXPORTERS OF SOYABEAN IN THE WORLDSoy has been grown for three millennia in Asia and, more recently, has been successfullycultivated around the world. Today, the world’s top producers of soy are the United States,Brazil, Argentina, China and India.United StatesLarge-scale development of soybean production and processing in the U.S. began during the1940s and 1950s spurred on by a rapid increase in both domestic and worldwide demand forprotein meal and oil. Harvested acreage for soybeans in the U.S. more than tripled between1940 and 1955, from 4.8 million acres to 18.6 million, while total production of soybeansincreased nearly five-fold, from 78 million bushels to 374 million.As the number of acres devoted to soybeans continued to grow during the 1960s, the UnitedStates became a world soybean superpower and began exporting large quantities of soybeans,as well as meal and oil, to Europe and Asia.Despite substantial growth in oilseed and oilseed product output in the past 25 years andrecent gains in export volume, the U.S. share of global exports has steadily diminished. In themid- to late 1970s, the United States dominated world trade in unprocessed oilseeds, with aglobal market share of more than 70 percent. Recently, this figure has fallen below 50percent. From a smaller percentage base, the United States has seen its share of oilseed mealand vegetable oil exports decline even more sharply, particularly before 1990.
  11. 11. DECLINE OF UNITED STATES AND THE RISE OF BRAZIL AND ARGENTINAWhile soybean exports from the United States have grown over the past 25 years, the share ofU.S. exports in global oilseeds trade has declined. A key development has been thephenomenal growth of foreign soybean output and exports, particularly by Brazil andArgentina. Foreign soybean output now exceeds that of the United States, and Brazil andArgentina currently share more than half of the soybean export market, up from less than 15percent before 1980. With increased soybean production and rapid growth in crushingcapacity, Brazil and Argentina have each surpassed the United States in soy meal and soy oilexports. Another factor is the recent expansion of U.S. meat exports, which stimulatesdomestic meal use rather than exports of soybeans or soybean meal. Brazilian and Argentinesoybean and meal exports are projected to continue capturing market share from the UnitedStates in the next decade.Brazil now trails only the United States in soybean production. Brazilian soybean growingregions used to be concentrated in the south, relatively near the major ports. In recent years,soybeans have expanded into the vast farmland of the centre-west states, as infrastructureimprovements have cut internal transportation costs. Brazils vast reserves of farmland couldpermit a continued significant expansion in soybean area, though expansion is currentlylimited due to insufficient transportation infrastructure.Argentinas soybean growing regions and crushers are located close to port facilities, wherethe country’s highly developed crushing industry and relatively small domestic market makesit the worlds largest exporter of soybean meal and oil. A lower export tax on processedcommodities than on unprocessed commodities also favours the export of soybean oil andmeal from Argentina. Recent increases in production by Argentine and Brazilian grain andoilseed producers could foreshadow continued gains on the strength of abundant undevelopedagricultural resources, more stable economies, and expanding trade liberalizationGiven the amount of available arable land and water resources in Brazil, it is expected toeventually become the number one soybean-producing nation. Already, South America as acontinent produces more soybeans than North America (combined U.S. and Canadaproduction). In the past decade, large tracts of fertile land and low labour costs have fuelledexplosive growth in South America’s soy industry. Poor road and rail infrastructure, as wellas economic instability and environmental concerns, have been the primary checks to furtherexpansion.In the U.S., soybeans are grown mostly in the Midwest. The top soy-producing states areIowa, Illinois, Minnesota, Indiana and Nebraska. Many farmers in this region grow corn andsoybeans in rotation.The Brazilian states with the greatest soybean production are Mato Grosso, Paraná and RioGrande do Sul.
  12. 12. List of Exporters for Soyabean in 2010 20000000 18000000 16000000 14000000 12000000 10000000 8000000 6000000 Exported Value, USD thousand 4000000 2000000 0Source: TradeMapAs shown by the above graph, the leading exporter of soyabean in the world is United Statesfollowed by the two South American nations Brazil and Argentina.The percentage share in world exports is shown in the following graph 50 45 40 Share in World Exports (%) 35 30 25 20 15 10 5 0 United States Brazil Argentina Paraguay Canada Uruguay Netherlands CountriesSource: TradeMap
  13. 13. Major Importers of Soybean OilWorld oilseed trade consists of many closely substitutable commodities, such as soybeans,rapeseed, sunflower seed, and cottonseed. Countries also trade oils and meals obtained fromcrushing oilseeds. Foreign import demand depends on the difference between countriesdomestic oilseed output and consumption. Divergent demand for protein meal and vegetableoil, as well as limits on domestic processing capacity, determines the ratio of oilseeds tooilseed products that countries import. The volume and source of foreign imports depends onseasonal availability and relative prices, credit and delivery terms, local preferences, andquality. Country policies, such as tariffs and domestic subsidies, also can affect prices and theavailability of competing products.Some of the major importers of soybean oil in the world are:China: China is the worlds fourth-largest producer of soybeans. The major Chinese soybeangrowing regions are in the northeast part of China. Yet, rapid growth of Chinas economy hasspurred food consumption, turning the country into the worlds leading soybean importer.Changes in Chinas agricultural and trade policies have greatly influenced world oilseedmarkets. Chinas WTO accession has reduced import tariffs and quantitative restrictions to itsoilseed market. China:Imports(MT) 3000 2727 2494 2500 2000 1514 1319 1400 1400 1500 1000 500 0 2007/08 2008/09 2009/10 2010/11 Nov Dec 2011/12 2011/12India: The major Indian soybean growing region is in the central state of Madhya Pradesh.Indian production of soybeans and other traditionally grown oilseeds—such as peanuts,rapeseed, and cottonseed—has increased in the last decade, although yields are among theworlds poorest. India often imposes prohibitive barriers on oilseed imports, so its domesticcrushing industry relies on domestic oilseed supplies. Domestically produced oilseeds arehighly valued sources of vegetable oil, but domestic consumption has risen faster than
  14. 14. domestic production so that India is now among the worlds largest vegetable oil importers.India is a smaller (but growing) consumer of soybean meal, and exports its surplus to otherAsian countries. India:Imports(MT) 1800 1598 1600 1400 1200 1060 945 1000 850 850 800 733 India:Imports(MT) 600 400 200 0 2007/08 2008/09 2009/10 2010/11 Nov Dec 2011/12 2011/12European Union: The European Union is self-sufficient in vegetable oil production, but itsprotein deficit still makes it the worlds largest importer of soybean meal and second-largestimporter of soybeans. Since the 1960s, EU imports of soybeans swelled because of rapidgrowth in livestock production and duty-free concessions signed in trade agreements. In the1970s and 1980s, soybean consumption slowed as EU agricultural policies subsidized a largeexpansion in domestically produced rapeseed and sunflower seed, eroding the market foroilseed imports. The U.S. Government challenged these subsidies and, in 1992, the EUcommitted to a number of reforms of its Common Agricultural Policy (CAP), including arealimits on the planting of oilseeds. Further CAP reforms reduced per-hectare direct paymentsto oilseed producers to those received by grains producers. Until 2005, reforms encouragedEU farmers to scale back oilseeds planting. However, recent EU biodiesel policies haveencouraged EU farmers to dramatically increase oilseeds area, especially rapeseed.In coming years, EU enlargement and CAP reform are projected to swell internal grainsupplies and allow EU grain prices to fall even more. Despite relatively low protein-mealprices, the comparatively larger reduction in the cost of feeding grains to livestock shouldcurb EU soybean meal consumption and imports. Historically, high import tariffs on cerealshave boosted EU consumption of soybean meal, which has been favoured by duty-free accessfor soybeans. Over the last decade, lower grain prices and several animal disease epidemicsresulted in significant increases in the feeding of grains and oilseed meals and a reduction inthe feeding of nongrain feed ingredients, such as meat and bone meal .
  15. 15. Imports:EU(MT)1200 10361000 905 794 800 800800600 550 Imports:EU(MT)400200 0 2007/08 2008/09 2009/10 2010/11 Nov Dec 2011/12 2011/12
  16. 16. Policy & Procedure governing import of Soybean OilImport policies have played a key role in determining the overall level and type of India’sedible oil imports for decades. Although significant imports were permitted prior to 1994,they were controlled directly by India’s State Trading Corporation (STC) and subject to state-imposed import quotas. In 1994, the import regime changed fundamentally when, as part ofits obligations under WTO rules, India eliminated the state monopoly on imports and placedimports under a privatized open general license (OGL) system. Under the new rules, Indiaalso agreed to eliminate import quotas and placed upper “bound” (maximum) limits on tarifflevels. These changes made the rules governing edible oil imports more transparent andimports more responsive to market forces.Privatized Imports and Tariffication Key Policy ChangesPrior to 1994, edible oil import levels were determined by the government and made by themonopoly STC, based on such factors as domestic market conditions, producer versusconsumer interests, international prices, and foreign exchange availability. Although thegovernment did at times permit relatively high imports— averaging as much as 1.3 milliontons annually between 1976/77 and 1987/88—imports were sharply curtailed in 1988/89-1993/94, when the government promoted domestic oilseeds production under its TechnologyMission on Oilseeds (TMO) program. During the TMO program, oil imports averaged only325,000 tons per year, leading to increased domestic oilseed prices and a temporary surge indomestic production.When edible oil imports were placed under the OGL system in 1994, private traders werepermitted to import any quantity of vegetable oils, subject only to a tariff. The tariff wasinitially set at 65 percent on all edible oils—still relatively high, but significantly below theimplied tariff when imports were under quantitative controls. Under the Uruguay RoundAgreement on Agriculture (part of the agreement establishing the WTO) India also agreed tobound (maximum) tariffs of 45 percent for crude or refined soybean oil imports. Tariffs on allother edible oil imports were bound at 300 percent, except refined rapeseed oil and crudesunflower-safflower oils, which were subject to over-quota tariffs of 75 and 85 percent,respectively.In 1995-98, India’s tariff structure was relatively simple and increasingly liberal—with acommon applied ad valorem (percentage) tariff for all oils progressively lowered to auniform rate of 16.5 percent by the middle of 1998.5 Importers responded to the lower tariffsand declining international prices by importing 4.6 million tons of vegetable oil in 1998/99,up sharply from earlier levels, and more than double the level of imports in 1997/98.Beginning in 1998, however, the Indian Government began making frequent tariffadjustments to protect domestic oilseed producers and processors from imports and to smooththe effect of fluctuating world prices on domestic consumers (figs. 6a and 6b). Althoughapplied tariffs fell in 1999 after an initial hike in June 1998, the trend after April 2000 wereincremental increases to applied rates for all oils, with adjustments being made to the relativerates on different types of oil—e.g., palm versus soybean oil and crude versus refined oil—creating a more complicated tariff structure.
  17. 17. The main effect of these changes was to slow the growth of imports, which declined from 6.0mmt in 2000/01 to 5.2 mmt in 2001/02—but rebounded to 5.8 mmt in 2002/03. The tariffhikes also made the tariff on soybean oil increasingly preferential, since tariffs on palm,rapeseed, and sunflower oils could be raised well above the 45-percent tariff binding onsoybean oil, although recent adjustments to the palm oil tariff have reduced this preference(see appendix, “Chronology of Trade Policy Changes Since 2000”).In addition to adjusting tariffs, the government established a tariff rate value (TRV) systemfor palm oil in August 2001 and for soybean oil in September 2002. The TRV system isintended to prevent underinvoicing (reporting low import prices to evade tariffs) by importersand establishes a government reference price for tariff calculations. The reference prices aresupposed to be periodically revised to reflect actual market prices, but in practice, delays inmaking these adjustments have resulted in tariff assessments different from what would haveoccurred had tariff rates been applied to actual market prices. In September-December 2002,for example, differences between reference and market prices resulted in an estimated actualtariff of 59 percent for crude palm oil (compared with the declared rate of 65 percent) and 48percent for crude soybean oil—above India’s WTO bound tariff rate on soybean oil of 45percent. Thus, the TRV system could shift the composition of imports between palm andsoybean oils depending on the relationship between reference prices and prevailing marketprices. In summary, although Indian import policy is more transparent and liberal than priorto the mid-1990s, India has also used the flexibility within its WTO commitments to makefrequent policy adjustments in response to evolving domestic and international marketconditions. These adjustments make overall import demand and the market shares of differentimported oils uncertain.Some other policy related aspects for import of soybean oil are: • Winterised and deodorized refined soybean oil can get automatic approval for Foreign Technology Agreements and can get approval for 51% Foreign Equity • The FDA Action Level for unavoidable pesticides like DDT, TDE & DDE in soybean oil is 1 ppm • The bound and applied tariffs on soybean oil is 45% • In March 2009 the Government of India did away with the 20% import duty on soya oil thereby making soya oil more competitive with palm oil • India’s trade policy requires that all imports of biotech food/agricultural products or products derived from biotech plants/organisms should receive prior approval from the Genetic Engineering Appraisal Committee (GEAC). Refined soybean oil derived from Round-up Ready soybeans is the only biotech food/agricultural product currently approved for import.
  18. 18. Import planning of soybean oil for Indian marketsIndian agricultural imports tend to consist of staple foods, such as vegetable oils and pulses(peas, beans, and lentils), of which there is chronic undersupply from domestic production. In2008, vegetable oils (mostly palm oil and soybean oil), pulses and nuts accounted for 60percent of all Indian agricultural imports. Notably, Indian imports of food grains (excludingwheat), feed grains, oilseeds, meat, dairy products, sweeteners, and processed foods werenegligible in 2008. India is self-sufficient in many of these products.Currently India has about 45% bound and applied tariff duty on soybean oil. But apart fromthese trade related barriers India also imposes certain Non-Tariff Measures (NTMs). TheseNTMs allow India to curb imports on certain commodities and on soybean oil also. TheIndian Government has these NTMs to encourage and increase domestic production ofsoybean oils. In general, high Indian tariffs and burdensome nontariff measures (NTMs) arethe principal reasons impeding products from entering the Indian market.Low levels of trade in soybean oil are an outcome of Indian government policies aimed atfood security, food self-sufficiency, and income support for farmers, implemented throughdomestic agricultural production support, tariffs and nontariff measures (NTMs), and exportrestrictions.Another important factor which one needs to keep in mind import planning for soybean oil isthe price that one is giving in the international market. Currently, United States being thelargest producer of soybean oils is the largest exporter, but many new countries likeArgentina and Brazil are coming up very competitively and have reduced the world share ofexports of United States for past few years. Limited imports from the United States reflect, inpart, competition in the Indian market from other suppliers for soybean oil. Argentina is thelargest supplier of soybean oil to the Indian market, accounting for 76 percent of Indiansoybean oil imports, followed by Brazil with 18 percent. The United States accounted foronly 2 percent of India’s soybean oil imports. Indian buyers reportedly buy soybean oilprincipally on the basis of price, and in recent years, Argentine soybean oil was priced lowerthan the U.S. product.It should also be kept in mind that India imports both palm oil and soybean oil. Since palmoil is cheaper than soybean oil so the duties on palm oil are less than that of soybean oil. Butas of late the Government has fixed the duties on palm oil and soybean oil nearly same butsoybean oil being a high selling product, still it is expensive to buy in the internationalmarkets and palm oil being a decent substitute, importers go for palm oil.India is one of the largest edible oil markets in the world, and domestic producers are unableto satisfy Indian demand. Several factors—soybean industry fragmentation; governmentpolicies that encourage small-scale activity and favour grain production instead of oilseedproduction; marketing and distribution inefficiencies; and irregular water supplies—negatively affect vegetable oil production in India. As a result, India imports roughly one-halfof its annual consumption.
  19. 19. With India’s lagging domestic supply, low tariffs, and few specific nontariff measures,soybean oil producers could be in a good position to supply the Indian market except for twocost factors: prices for soybean oil substitutes and a global competitor’s export tax structure.India satisfies the overwhelming share of its vegetable oil import needs with low-cost palmoil from Indonesia and Malaysia because the Indian vegetable oil market is fairly pricesensitive. When India does import soybean oil, it turns first to Argentine and Braziliansources, as those producers have certain shipping cost and seasonal advantages. Moreimportantly, Argentina uses a differential export tax scheme, which taxes raw soybeanexports at a higher rate (35 percent) than soybean oil exports (32 percent). Although the taxon Argentine soybean oil exports raises their price on world markets, taxing raw materialexports at a higher rate than processed product exports results in an export subsidy forArgentina’s oilseed processors. This export subsidy confers a competitive advantage for thiscommodity product over U.S. soybean oil in the Indian market.
  20. 20. CHALLENGES:Soybean Oil and products have had their own share of challenges pertaining to different reasons.Some reasons are:-SCM/ Warehousing Challenges:- • Low soybean yield in India is the major constraint to realizing widespread expansion across different regions and different farm groups. Expansion of soybean production in India has been sustained only by area expansion. • The presence of low number of certified warehouses • The small size of the soybean harvest (relative to processing capacity), the short marketing season and the fact that most output is purchased locally (as almost all soybean crushing plants are located within the production region) are factors that have limited price volatility and long duration storage.
  21. 21. • Although high yields of soybean are obtained on research plots and in demonstrations and maximization trials on the farm, their actual realization by a large segment of the farming population has not occurred. • The dependence of India on international markets for oilcakes in general is quite high. The price on the international markets depends mainly on the US crop. Given the high meal-to-oil ratio in the case of soybean, the expansion of Indian soybean cultivation will be constrained by the comparative advantage of our selling soy meal on the international marketFinancial Challenges:- • A price support policy is a necessary condition, but is not sufficient to sustain the accelerated expansion of soybean area and production. • Comparative economics, which is in favor of soybeans, is likely to be tilted against the crop if yields continue to decline. • Enough attention has not been paid either to the development of low cost soy foods. • The capital component in cultivation of yellow soybeans is nearly double that of black. This implies that the cultivation of yellow soybean is relatively more capitally intensive and involves higher cash expense compared to that of black. This is part of the reason that the black soybeans are favored by the farming community, who operate under severe capital constraint in M.P.Marketing Challenges:- • Enough attention has not been paid to the promotion of consumer awareness. • Lack of adequate efforts to promote consumer education on the nutritive value of soybean and soy products, and also suggestive of comparative economics working against the large scale consumption of soy products. • Lack of adequate marketing for raw soybeans is yet another major constraint in areas where developmental potential exists for soybeans. It is recalled that public support has mainly promoted production at the farm level, and the NAFED has been entrusted with
  22. 22. the task of implementing the procurement policy of the government at support prices. The NAFAD has for the most part been inactive in M.P., because farm-factory interactions have promoted the role of private initiative in marketing. However, in areas where soybean adoption has yet to gather momentum, the procurement policy at support prices does not appear to have been effective.Traditionally, three marketing channels for soybean:-Channel-I- Producer—Village Merchant—Wholesale dealers—Processor—Refiners—Wholesale dealers of soybean oil—Retailers of soybean oil-consumers.Channel-II-Producer—Cooperative societies—Processors—Refiner’s wholesale dealers ofsoybean oil retailers of soybean oil-consumers.Channel-III-Producer—Wholesale dealer’s in Regulated Market—Processor—Refiners—Wholesale dealers of soybean oil-retailers of soybean oil-consumers.In general, the total marketing cost of soybean was observed highest on channel-I and lowest onchannel-II. The producer share in consumer price was almost similar in channel-II and channel-III. Exploitation by middlemen should be checked.THE PFA (Prevention of Food Adulteration Act):Some mandates under the PFA act are as below for Soybean Oil:- • In case of any package containing bread or liquid milk, sterilized or Ultra High Temperature treated milk, Soya milk, flavored milk, any package containing dhokla, bhelpuri, pizza, doughnuts, khoa, paneer or any uncanned package of fruits, vegetables, meat, fish or any other like commodity which has a short shelf life, the date, month and year in which the commodity is manufactured or prepared or pre-packed shall be mentioned, on the label. • The declaration be made as follows: "BEST BEFORE.................DATE/MONTH/YEAR" OR "BEST BEFORE .............. DAYS FROM PACKAGING" OR
  23. 23. "BEST BEFORE ................DAYS FROM MANUFACTURE" OR "BEST BEFORE UPTO.... DATE/MONTH/YEAR For the Period OR up to and inclusive "BEST BEFORE WITHIN ...........DAYS FROM THE of Ist DATE OF PACK• Poisonous metals :- (1) Chemicals described in monographs of the Indian Pharmacopoeia when used in foods, shall not contain poisonous metals beyond the limits specified in the appropriate monographs of the Indian Pharmacopoeia for the time being in force.• Nickel is a poisonous metal that is identified for soybean oil. It should not be more than 1.5 parts per million of the entire package.• Insecticides and Pesticides: - Triazophos should not be more than 0.05 parts per million. Imazethapyr not more than 0.1 ppm.• The annual supplement to the Indian government’s Foreign Trade Policy (2004-2009) announced by the Commerce and Industry Minister on April 7, 2006, calls for approval from the GEAC for imports of biotech food, food additives, or any food product that contains biotech material that is being used for industrial production, environmental release, or field application. Also, import consignments containing biotech products should carry a self declaration that the product is bioengineered, without which the importer is subject to penal action under the Foreign Trade (Development and Regulation) Act, 1992. This rule became effective July 8, 2006. However, the government has given a special exemption to imports of soybean oil derived from biotech soybeans for consumption after refining.