News: Asia Subcontinent
In Sri Lanka, USSEC has had two significant landmarks that helped obtain market access for U.S. Soy: the acceptance of genetically modified (GM) soybean meal for use in animal feeds and a zero customs tariff for imports.
In 2008, Dr. Athula Mahamage was appointed as USSEC’s Sri Lanka country representative and his concerted efforts with local influencers and policy makers helped lead to these accomplishments. As a result of this and the continued tech and trade efforts by Dr. Athula, the U.S. Soy industry has enjoyed a steady increase in the soybean meal market share in Sri Lanka. The country imported about 220,000 metric tons (MT) of soy meal in 2015/16, of which 70 percent is U.S. soybean meal.
However, markets change, policies get altered, and government rules are amended. Caught in one such transformation was the reversal of customs duty on soybean meal that was notified by the Sri Lankan Government in November 2016. The duty, which was set at 15 percent, put Dr. Athula and his team (members of the animal husbandry, finance ministry, and trade associations in the livestock and poultry industry) on alert. They worked strategically to bring the duty down to 5 percent in December 2016. As a next step, the team convinced the authorities at the finance ministry on the importance of soybean meal, which supports a growing poultry/animal feed industry in the country and has successfully gotten soybean meal listed in the Gazette Notification as an “exempted item” for customs duty. Competitiveness for U.S. soybean meal entering Sri Lanka was hampered slightly but has been successfully restored back to its original state.
Market access is a priority area for USSEC’s global market reach. Constraints of different natures exist in different countries and some issues may even crop up from nowhere like the one cited here. Continued efforts in this area ensure markets for U.S. Soy.
In two consecutive events titled “Protein for All,” USSEC India targeted the layer industry to accelerate demand for soybean meal usage. With 83 billion eggs produced last year, India ranks third in the world. The province targeted for this activity, Andhra Pradesh, accounts for 30 percent of India’s egg production. The region is also the leading province for the production of fish and shrimp and figures in the top five provinces for broiler production.
Soy inclusions in the layer sector can swing substantially depending on the price, supply, and availability of other competing sources of protein. Customers recognize that soybean meal is produced using a standard process and therefore the quality of protein is nutritionally superior to other protein sources. In order to build more demand for soy in the layer sector, USSEC conducted two events in this province, set apart by a distance of 124 miles, where the maximum concentration of operations exist. It partnered with the leading poultry industry group, Srinivasa Hatcheries, which helped gather potential customers at the seminars.
Dr. S.V. Rama Rao who represents the Poultry Directorate of the Central Government of India was the lead speaker. A well-known researcher and an accepted guide for the industry, Dr. Rao spoke in depth on the quality and nutritional intricacies of soybean meal and how they affect egg production. USSEC animal utilization consultants Pawan Kumar and Yadu Nandan spoke on the commercial side, guiding the audience on buying skills and supply and demand trends of soy. The consultants also emphasized egg as a low cost protein source for the Indian population and recommended that the government position eggs in their social welfare and feeding programs. USSEC Deputy Regional Lead – Asia Subcontinent (ASC) Vijay Anand wrapped up the discussions by explaining how value addition to soy can be benefit the sellers (crush plants) and how customer demand for full strength soy protein can benefit the buyers (poultry sector).
An estimation made by USSEC consultants helped to quantify the target customers at these two events. The first event conducted in Vijayawada had 110 layer farmers and 8 aqua feed millers who represented 28 million layer bird holdings and 430,000 metric tons (MT) of annual aqua feed milling (layer and aqua). The layer group represented a soybean meal usage of 109,000 MT, while the aqua feed millers represented 86,000 MT. Similarly, the second event held at Rajahmundry, with 130 participants represented 23 million layer bird holdings requiring 92,000 MT of soybean meal in their operations.
USSEC recently attended the Pakistan Edible Oils Conference (PEOC) and visited customers in Pakistan, in addition to holding Asia Subcontinent (ASC) staff planning meetings in India.
USSEC CEO Jim Sutter and USSEC Acting ASC Regional Lead and Marketing Director – Animal Nutrition Pam Helmsing traveled to New Delhi and Agra, India and Karachi and Lahore, Pakistan from January 13 – 26. During that time, they met with customers and potential customers of U.S. Soy in Pakistan to hear about their markets and concerns and talk about the value of U.S. Soy; Mr. Sutter spoke at the PEOC event; and they worked with the ASC team to plan for the execution of existing and future programs.
Mr. Sutter addressed approximately 500 attendees at PEOC, speaking about the value and sustainability of U.S. Soy. After the PEOC event, meetings with Pakistani crushers and feed mills took place.
USSEC’s plans in Pakistan include: technical training for the solvent extractor industry; nutritional expertise for the poultry industry; possible assistance with demand building for poultry, including nutritional information and countering junk science that says poultry is harmful; possible U.S. Soy oil promotion assistance to position soy oil as a premium brand; and the possibility of bringing a group to Kansas State University for soybean procurement training through a U.S. Department of Agriculture (USDA) Cochran grant.
Palm and canola currently dominate the oil market in Pakistan, although soybean imports for crush have increased dramatically. The industry recognizes that oil produced with U.S. Soy is lighter in color and has a lower cost of processing than soy from South America. There continues to be a preference for canola and palm, however, because of higher oil contents and consumer preference. Pakistani crushers are very price sensitive. They admit that they are unable to take U.S. Soy and produce as high a quality of soybean meal as can be imported from the U.S. and are anxious to learn how to improve their processes to do so.
Because purchases of soy by individual companies are rather small, purchases are usually made with multiple consignors. This means competitors are getting the same quality at the same price at the same time, which leads to consensus opinions about the quality and/or issues with product from a given country or supplier. This is true for both soybean meal and whole beans. The industry is moving toward some bulk handling.
The feed industry also recognizes the difference in quality between U.S. soybean meal and meal produced locally from U.S. beans. They note that the quality is improving. The feed industry is sophisticated and recognizes the value of U.S. Soy, both intrinsic and extrinsic advantages, and is looking for ways to calculate what premium they can afford to pay for U.S. origin.
The poultry industry has been growing at a rate of eight to ten percent yearly, but there are some plateau years. Profitability is low, with chicken at about two-thirds the price of lentils. The two major barriers to growth in chicken consumption are poverty and misinformation about the quality of poultry meat. The Pakistan Poultry Association is planning a feeding program at a few public schools, providing eggs and chicken legs to children and will collect data to show improvements in health, school attendance and learning.