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Driving growth: The promising future of India’s Oilmeal exports

India’s oilmeal industry is defying the overall challenging trend in international trade, witnessing a remarkable 25.6% YoY surge in exports from April to January, 2023-24 to reach a value of US$ 1.4 billion. This makes it the fastest growing agri export commodity during the period, followed by fruits & vegetables (15.9%) and tobacco (15.5%).

Fueled by heightened price competitiveness and burgeoning global demand, especially for soybean and rapeseed meal, this growth underscores India’s pivotal role as a major producer and exporter of oilmeals. Despite obstacles like export bans and supply chain disruptions, the sector has shown remarkable resilience.

Looking forward, a promising future awaits, buoyed by escalating demand for protein-rich feed globally and advancements in manufacturing technologies. With a robust track record of meeting diverse international demands and strategic market positioning, India’s oilmeal exports continue to soar, highlighting its indispensable role in the global trade landscape.

pixabay

Image Source: Pixabay

Oilmeals are versatile by-products obtained from the extraction of oils from a variety of oil-bearing seeds and nuts. These meals are rich in protein, making them valuable components in various end user industries.

Soybean meal is one of the most common oilmeals produced globally. Soybeans are crushed to extract oil, leaving behind a protein-rich meal. Canola meal is derived from rapeseed or canola after oil extraction. It’s widely used in animal feed due to its balanced amino acid profile. Another popular category is sunflower meal, which is produced from the residues left after the oil extraction process. It’s a good source of protein and fiber.

Cottonseed meal is obtained from the seeds of the cotton plant after oil extraction. It’s rich in protein but has limited use in animal feed as it contains gossypol. Palm kernel meal is a by-product of palm oil extraction from the kernel and is a fibre rich meal used in anima feed. The same goes for copra meal, which is derived from coconut after oil extraction.

The key end-user industries of oilmeals are:

Animal feed: Oilmeals are used extensively in formulating feed for poultry, swine, cattle, and aquaculture. The high protein content and balanced amino acid profile make oilmeals valuable components in achieving optimal animal growth and performance.

Food industry: Oilmeals find applications in human food products, primarily as protein supplements. They are used in bakery products, protein bars, meat substitutes, and vegetarian/vegan products.

Pharmaceuticals and nutraceuticals: Oilmeals contain bioactive compounds and functional components that are also beneficial for human health. Therefore, they are utilized in the production of dietary supplements, nutritional powders, and pharmaceutical formulations.

Cosmetics: Some oilmeals, particularly those derived from seeds like soybean and sunflower, are used in cosmetics and personal care products. They offer moisturizing properties and can be found in lotions, creams, and hair care products.

Oilmeals can undergo further processing to enhance their nutritional value and application versatility. Processes such as solvent extraction, enzymatic hydrolysis, and micronization are employed to produce specialized protein concentrates and isolates, which can be leveraged in niche applications like sports nutrition, infant formula, and functional foods.

From a single solvent extraction plant in Bhavnagar for extracting oil from oilseed cakes and oilseeds in 1945, the Indian solvent extraction industry has come a long way. The Solvent Extractors’ Association of India has around 875 members, which includes around 350 working solvent extraction plants with combined oilcake/ oilseed processing annual capacity of about 30 million tonnes. The manufacturing capacity of oil mills in India varies based on factors like technology, scale of operations, and investment. Large-scale integrated oil mills coexist with smaller, decentralised units.

Oilmeals leading India’s agri export growth

India’s oilmeal exports surged by a record 25.6% in April-January, 2023-24, reaching a value of US$ 1.4 billion, making it the fastest growing agri export during this period (DGCIS).

According to BV Mehta, Executive Director of SEA, key drivers of this growth were soybean meal and rapeseed meal, benefiting from improved price competitiveness, global market competitiveness and logistics advantages in Asian markets. Another key factor was the poor soybean harvest in Argentina, which is the market leader. Despite a setback in November 2023, India’s oilmeal market remained positive. Southeast Asia is a major consumer of Indian soybean meal. India has a logistical advantage over Southeast Asian destinations, and can supply in small lots.

Globally, as per latest data available for 2022, Brazil has emerged the market leader with exports of US$ 10.8 billion in 2022, followed by the US (US$ 9.6 billion) and Argentina (US$ 7.6 billion). Among the top 15 exporters, Indonesia (33.8%), Russian Federation (23.8%) and Poland (19.6%) have displayed fastest CAGR during this period.

India’s oilmeal export trends

HS Code Commodities Exports in 2018 Export in 2023 India’s 5 year export CAGR Share in India’s exports YoY growth
2302 Bran sharps and othr residues… 2.86 218.91 138.11% 0.05% 34.42%
2304 Oil-cake and other solid residues (soy) 902.13 1,115.80 4.34% 0.26% 95.55%
2305 Oil cake and othr solid residues (groundnut) 5 12.62 20.34% 0.003% 44.39%
2306 Oil-cake, othr solid residues (veg/microbial fat/oils othr thn of 2304/2305) 388.91 736.89 13.63% 0.17% 12.03%
2309 Preparations used in animal feeding 298.19 336.5 2.45% 0.08% -1.84%

Source: Ministry of Commerce and Industry, values in US$ million

Oilmeal exports trend

Source: Ministry of Commerce and Industry

India’s oilmeal exports have witnessed fluctuations in recent years. While there have been periods of growth, factors like changes in global demand, the trade policies of importing countries, and domestic supply dynamics influence export trends.

A surge in the export of soybean meal helped India register a 24% growth in the export of oilmeals during the first nine months of 2023-24. According to the Solvent Extractors’ Association of India (SEA), India exported 34.96 lakh tone (lt) of oilmeals during April-December of 2023-24, marking a growth of 24.16%. In terms of value, oilmeal exports were valued at US$ 2.42 billion in CY 2023, registering a growth of 38.9% YoY.

Currently, the Indian government has banned the export of de-oiled Rice Bran till 31st March, 2024. This decision has particularly severe implications for the Eastern States including West Bengal. Consequently, with the ban on export persisting, rice bran processors in eastern India are now confronted with the looming threat of shutting down their operations. This not only adversely impacts the rice milling industry but also poses a risk to the overall production of rice bran oil, according to BV Mehta.

Major importers of Oilmeals

Importers Value exported in 2022 India’s 5 Yr
export
CAGR (%)
Share in India’s exports Ranking
of
partner
countries
in world
imports
Imports from world Exporting nations share
Bangladesh 349.2 13.0% 20% 40 482.7 Brazil (21%), India (20.9%), USA (10.2%)
Vietnam 248.5 6.8% 14% 3 4030 Argentina (40.8%), Brazil (24%), India (6.5%)
South Korea 223.4 20.7% 13% 17 2,297.40 Brazil (32.3%), India (10.5%), USA (10.2%)
USA 139.6 16.2% 8% 2 5,142.95 Canada (39.4%), Thailand (18.3%), China (7.3%)
Thailand 102.0 21.0% 6% 15 2,321.61 Brazil (65.3%), China (6.1%), USA (5.7%)

Source: ITC, Trade Map, Values in US$ million

Oilmeal export destinations

Source: ITC Trade Map

Top oilmeal importers from India

India ranked 14th in oilmeal exports in 2022. Bangladesh, Vietnam, South Korea, USA, and Thailand are the major importers of oilmeals from India. India exported 6.62 lt (lakh tonnes) to Bangladesh during the first nine months of 2023-24. This constitutes 27,771 tons of rice bran extractions, 3.14 lt of rapeseed meal, and 3.21 lt of soyabean meal.

India exported 3.61 lt of oilmeals to Vietnam during April-December 2023-24. This included 90,540 tons of ricebran extraction, 2.19 lt of rapeseed meal, 50,506 tons of soyabean meal, and 905 tons of groundnut meal.

India top oil meal export markets_TPCI

South Korea imported 7.30 lt of oilmeals during April-December 2023-24. This included 5.13 lt of rapeseed meal, 1.83 lt of castorseed meal, and 32,946 tons of soybean meal. Thailand imported 4.95 lt of oilmeals (5.09 lt) during April-December 2023-24. This included 4.81 lt of rapeseed meal, 8,445 tons of soybean meal, 4,666 tons of rice bran extraction, and 701 tons of castor seed meal.

The fastest growing markets for soybean meal (HS 2304) during CY 2023 (among the top 10 export markets) were:

UAE (US$ 83 million, 83,938.70% YoY)

Iran (US$ 96.2 million, 51,298.4% YoY)

Pakistan (US$ 40.6 million, 8,568.60% YoY)

Bangladesh (US$ 271.9 million, 5,877.99% YoY)

Thailand (US$ 45.8 million, 1,552.9% YoY)

On the other hand, it must be noted that India’s market presence in overall oilmeal exports is not strong in some of the top markets for oilmeals, viz. China, France, Indonesia, UK, Poland and Spain. While it has managed a good presence in markets like the US and Vietnam, its share in these markets is currently low. This is an indicator of strong future potential that needs to be explored further.

Future Outlook

The future of India’s oilmeal sector looks promising, driven by factors like rising demand for protein-rich animal feed, technological advancements in oil extraction, government support for agriculture, and increasing global trade opportunities. However, the sector also faces challenges such as climate change impacts, price volatility, and evolving trade dynamics, necessitating adaptive strategies for sustained growth and competitiveness.

Chirag Garg, Director of Prorich Agro, “India’s oilmeal exports are growing due to the demand in the global market for protein-rich products to feed pets and livestock.”

India’s robust growth in oilmeal exports, driven by soyabean demand and competitive pricing, underscores its significance in the global market. The positive trend reflects not only market resilience but also the ability to meet diverse international demands, emphasising India’s pivotal role in the global oilmeal trade. However, the industry must expand its reach to more key markets like China and Germany, while enhancing its penetration in markets like the US and Vietnam where it has already made some inroads.

Government policies play a crucial role in regulating the oilseed sector, including support mechanisms for farmers, trade policies, and quality standards. Oilmeals play a vital role in various industries and are pivotal to India’s agricultural economy. With strategic interventions and collaborative efforts, the sector can navigate challenges and capitalise on emerging export opportunities for continued success.

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