Approach Soy S&D Differently

1. Presented by : Atul Mundhra & Associates, Indore AGROFEEDS (93013 38000, 98260 38000) Approach Soy S&D Differently

2. Soy in India – a Brief • India produces various oil-seeds & soy is prominent of them • It is a kharif production in India • Monsoon is a major factor for this crop • India has been producing soy since last 5 decades • Now it reached at the level of more than 10 Million Tons for last 5 years • That’s why; India is 5th Largest producer of soy in the world • Almost 90 % crop of India is produced in three states • Central India is the leading hub of Soy Industry having a bench mark of price • MSP of the Soybean for the year 2012-13 is 2240 per quintal

3. Soy Distribution in India All figures are in Lac of Metric Tones (Source : COOIT)

4. Indian Soymeal – a Brief • Indian Soymeal is 100 % non GMO product • It is well accepted in more than 60 Countries • India produces approx 75 lac tons (LT) Soymeal annually • Out of which export remains around 42 LT including 10 LT export to neighbor countries & domestic use at 33 LT approximately • Ratio of domestic use to overseas exports remain 1:1 • 98 % of the Soymeal is used into animal feed, poultry industry & aquaculture • India is 4th largest exporter of Soymeal in the world • CBOT is the major international reference market , however India does have its separate S&D for price discovery

5. ‘S’ - Supply Status • There are more than 90 Soy processors across three states however only 20 % plants run through-out the year • Top 3 processors of country crushes 40 % of the total crushing Prevailing Pattern • Now-a-days Indian soy industry is running at the same model of brazil soy industry wherein six months supply is oriented to export & another six month to cater domestic demand • Sellers remain reluctant in supplying small cargo to small buyers • Lack of attention towards Quality check measures • Usually offer a selected range of products • No standard mechanism for grievance redressal - for both Seller & Buyer • No system of Buyer’s feed-back about quality & supply performance • Production of steady cargo instead to the requirement as per Buyer

6. Supply Revolution Blueprint • Seller can fix an eligible credit supply risk for small & regular buyers • Sellers should ensure a thorough quality check on regular basis • There should always be a variety of product offerings like Hi-pro, Super Hi-pro etc. • Seller should prefer to provide goods according to buyer’s requirement rather than a steady cargo • Sellers should be kind enough to redress the grievances of the buyers • Sellers should have a proper feed-back system to improve the quality & performance

7. ‘D’ - Demand Status Prevailing Pattern • Domestic buyers generally purchase Soymeal on regular & ready basis without considering the forward position of availability • Lack of tie-up with sellers for a constant supply through-out the year • Prefer to buy from traders even on high credit appraisal due to liquidity crunch • Buyers reluctant to pay true value of ‘quality’ • Absence of independent quality assessment • Refrain to refer Soy S&D on regular basis • Absence of hedging mechanism • Crop Nos. are always estimated & not authenticated unlike in US, Argentina & Brazil there is an association for Crushing & Exports

8. Demand Revolution Blueprint • Should change the buying pattern on deferred window mechanism (As in export) • Ensure tie-up with sellers for a constant supply through-out the year to avoid unpredictable abnormal shortage later • Prefer to buy directly from crushers with eligible credit appraisal • Refer Data of Soy Supply & Demand on regular basis due to fragmented industry & unauthenticated data • Should take a proper hedging of raw material (meal) through physical forward contract instead of secondary market because E-contract settles on spot price of central region basis • A standard domestic Soymeal contract should be designed separately for local buying & that too for different locations • An Independent Arbitration body should be there & their arbitration should be enforceable to both Seller & Buyer

9. This S&D has been prepared by us • There always remain variation between official estimates & trade estimates • Supply & Demand is made more out of educated guess in absence of systematic mechanism to derive concrete quantity nos.

10. No platform to discuss crushing & feed demand S&D on regular basis

11. Intercessor – an eminent Link • Intercessor plays an important role in supplying & procuring Soymeal for the soy industry • Soy industry is well organized but inland trade is mostly unorganized • Unfortunately, India does not have a direct mechanism for automatic price discovery of domestic meal & in absence of that Intercessor remains a good platform for finding correct price discovery • One may keep a direct track of Soy S&D on regular basis through a Intercessor • Intercessor also mitigate the risk of both the parties to trade through his proper co-ordination, co-operation & knowledge • Information related to soy industry is readily available to mediator which can be helpful to buyer & seller as well • Always stand as primary arbitrator in case of contract dispute

12. Thank you Sincere acknowledgement to our Research Team : CA Naynesh Gandhi Nikhil Parwal Presented on : 4TH May 2013 At : Hotel Radisson, INDORE Feel free to contact on 0731 – 406 2626 / 27, 2566 500 Email : atulcorp1@gmail.com Global Trade Point of Agri Commodities Since - 1982