Global soy crunch to benefit India

Reduced cultivation of soybean in the US, which produces around 35 per cent of the world's crop, and the drought conditions in China have diverted South Asian soybean importers to India.

More than half of the estimated 9 million tonnes of soybean cultivation for 2006-2007 could be exported, say Indian soybean exporters.

Traditionally, Brazil, Argentina and the US have dominated the world soybean market with their collective production adding up to 80 per cent, while India produces around 3.5 per cent.

However, diversion of US cultivators to corn and maize this year, on account of a bumper crop, has reduced soybean cultivation in that country by 10 per cent.

Further, droughts in China could mean a shortfall of at least 1.5 million tonnes between the two leading producers.

Domestic producers are already gearing up for larger production. Rajesh Agrawal, spokesman for Soybean Processors Association of India (Sopa), says most Indian producers have large capacities and have begun to operate them at maximum capacity.

Leading the pack among the producers is Ahmedabad-based Gujarat Ambuja Exports (GAEL), the country's second largest producer of soybean. The company touched a market capitalisation of Rs 1,000 crore this month from Rs 25 crore in 2003.

"On account of 20 per cent growth in demand for the crop, a healthy EBIDTA margin of 10 per cent was witnessed in business this year from just 4.8 per cent last year " VijayKumar Gupta, promoter of GAEL said. The company is planning set up new production facilities for soya and maize and is looking at options abroad.

The additional production is expected to be exported to South Asian countries where a growth of nearly 20-25 per cent is expected this year, said Agrawal.

The demand comes at a time when prices of the crop are around 30 per cent more than last year. The current price is Rs 1,800 a quintal, while it was hovering in the range of Rs 1,200-Rs 1,400 a quintal last year.