Govt imposes stock holding limits on soymeal till June 2022 to tame prices

Soymeal millers, processors can hold stocks only up to their 90 days of production, says circular.

After clamping down on futures trading in a host of agricultural commodities and extending the deadline for free pulses import till March 2022, the Centre on Thursday imposed stock-holding limits on soymeal in a bid to control prices.

In a circular, the department of consumer affairs, food and public distribution said soymeal millers, processors or plants can hold stocks only up to 90 days of production.

Traders and trading companies can hold only up to 160 tonnes of soymeal with a defined and declared storage location. The stock-holding limits will be in place till June 30, 2022, according to the official circular. Traders have also been directed to declare and update all their soymeal stocks in a prescribed format for regular monitoring.

In an unprecedented move, the limits were imposed after amending the Essential Commodities Act of 1955 to include soymeal in the category. “The decision would empower the Centre and all states and union territories to regulate production and distribution of soymeal and smoothen the sale and availability of this item in the market. It will stop unfair market practices and enhance the availability for consumers like poultry farms and cattle feed manufacturers,” the Centre said in a statement. 

It added that the steps will stop unfair practices — like hoarding and black marketing — in the market and also cool down soyoil prices. 

Soymeal is derived from crushing soybeans and is the main ingredient of poultry feed meal. India’s soymeal is also in high demand in the world markets because it is produced from non-genetically modified sources.

In FY21, according to industry data, India exported 1.56 million tonnes of soymeal. This was 42.36 per cent of the total oil meal exports from the country that year.

Traders said that by crushing soybeans, they get 80 per cent of the meal and less than 20 per cent oil.

Soymeal rates have jumped sharply in the domestic market due to strong overseas demand and rise in soybeans prices.

Between April and August 2021, soymeal rates had jumped by over 60 per cent, triggering calls from the user industry — namely the poultry sector — for allowing free imports to tide over the shortage.

Following this, the Centre first allowed import of 1.2 million tonnes of genetically-modified soymeal. However, till December, only around 0.8 million has been imported.

Despite imports, soymeal prices in the domestic market continued to rule higher. As on December 17, prices were almost 61 per cent more than the same time last year.

Meanwhile, prices of soybeans had also jumped in key markets due to the general bullishness in the entire edible oil complex and strong meal demand. On December 17, soybean rates in Indore were almost 48 per cent higher than the same time last year. 

Speculative activity in the futures markets of soybean and stock holding by traders were blamed for the sharp rise in prices.

Production of soybean, according to the first advance estimate of the 2021-22 kharif crop, is expected to be 12.72 million tonnes. This is marginally lower than the 12.89 million tonnes produced last year.

The Soybean Processors Association of India (SOPA), in a recent representation, claimed that the latest soymeal consumption figures given by the poultry industry are highly inflated.

SOPA said the rise in soybean prices is not in the hands of the processors and it is not because of anything done by the processing industry. It has already flagged the issue of hoarding and undue speculation of soybean futures.

“Farmers cannot be forced to sell soybean at MSP (minimum support price) as desired by the poultry industry. Soybean farmers have the right to get remunerative prices like poultry farmers,” SOPA said.