Approach Soy S D Differently Presented by Atul

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

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 5 th 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

Soy Distribution in India All figures are in Lac of Metric Tones PARTICULARS MP MH RAJ CG SOUTH OTHERS TOTAL CROP SIZE (2012 -13) 59. 00 37. 00 10. 50 1. 60 4. 00 1. 30 113. 40 CROP SIZE (2011 -12) 55. 00 35. 00 10. 00 1. 50 4. 00 106. 50 (Source : COOIT)

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 4 th 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

‘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

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 Hipro, 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

‘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

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

This S&D has been prepared by us 1. There always remain variation between official estimates & trade estimates 2. Supply & Demand is made more out of educated guess in absence of systematic mechanism to derive concrete quantity nos.

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

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

Thank you Sincere acknowledgement to our Research Team : CA Naynesh Gandhi Nikhil Parwal Presented on : 4 TH May 2013 At : Hotel Radisson, INDORE Feel free to contact on 0731 – 406 2626 / 27, 2566 500 Email : atulcorp 1@gmail. com Global Trade Point of Agri Commodities Since - 1982