Overview of the JV and the future of soyabeans in India

At the outset, it is in order to express how lucky Ruchi was to find partners such as DJ Hendrick and KMDI. Like with any joint venture, the process of discovering and aligning each other’s vision is the most challenging one. I am happy to say that this was a quick journey for us – which is evident by the fact that we have already done some preliminary pilot breeding successfully in the last few months.

                                    

Before I speak about the details of this Joint venture and its potential for the country, I feel it is important to take a quick step back and appreciate the history and evolution of the supply path that soyabeans have taken both globally and domestically.

Soyabeans are arguably the most important oilseeds in the world, providing oil, protein, processed foods and other derivatives to its consumers.

The soyabean seed is crushed in an extraction unit, and thereafter yields 18% crude soyabean oil and 82% Soyabean meal. The oil is refined to yield cooking oil and the meal is used as animal feed.

In recent years, soyabean oil has also been a major feedstock for biodiesel production in the world, which is in turn used as a renewable source of energy for vehicles, railways, aircrafts, generators and others.

In 1990, the world produced 104 Million TONNES of Soyabeans.

In 2000, the world produced 175 Million TONNES of Soyabeans.

This year, the world will produce over 280 Million TONNES of Soyabeans.

This explosive growth is primarily due to a rapidly urbanizing world with China leading the way. The demand and hence the price has also been fueled by the conversion possibilities ofsoyabean oil into biodiesel which has been mandated by several Governments in the world.

Currently, the supply of soyabeansis dominated by North America, Brazil and Argentina which account for almost 85 percent of the world’s supply. China is the fourth largest producer contributing 6 percent and India 4 percent.

This 4 percent is nearly 12 million TONNES of soyabeans.

Why is all this important?

Currently, India is producing that 12 million TONNES of soyabeans at an extremely low and inefficient yield of 1.017 TONNES/Hectare.

This has tremendous scope for improvement as the global average stands at 2.5 TONNES / Ha.

Poor productivity in India is due to the following –

1.  Poor management practices

2.  Low genetic diversity

3.  Susceptibility to diseases and pests

4.  Low seed replacement ratio

Further, 12 Million TONNES of soyabeans roughly translates into 1.8 Million TONNES of crude soyabeanoil and 8.3 Million TONNES of SoyabeanMeal.

All of the 1.8 Million TONNES of oil that these 12 million TONNES of soyabeans produce is consumed locally. In fact, this is far from sufficient. Last year, an additional 1.5 million TONNES of soyabean oil was imported. Overall, India consumes 18 Million TONNES of Vegetable oil and imports a little over 60 percent of this requirement.

Therefore, there is an extremely large dependence on imported oil which posesa long term risk for the government of India. BecauseIndia is home to more than 1/6^th of the world’s population and is projected to be the world’s most populous country by 2025, the pitfalls of such rapid growth include severe strains on resources specially food availability at a price that is affordable to all.

Further, the Government of India is facing many problems with a widening trade and current account deficit, as well as a depreciating currency, inflation, and a depleting foreign exchange reserve.

These thoughts and worries are the basis and motivation for embarking on this Joint Venture.

I was introduced to David via email through Mike, all the way back in December 2012. I believe one of the hardest challenges we faced was coordinating a conference call between Canada, India, Singapore and Japan!

What was immediately encouraging was that all the challenges we faced in the preliminary months were dealt with as though we were already partners.

A Sincere Thank you to David, Mike and Dr.Jagdish for making this process a smooth one.

The Joint Venture companywill perform the following activities:

We will undertake a comprehensive soyabean breeding program that will use germplasm (or genetic resources) of soyabean seeds from across the globe that have desirable traits such as high oil content, greater pod size and count, and are drought and disease resistant. Our partners possess a large databank of these resources.

This germplasm will then be crossed with Indian germplasm in a complementary manner. Each season there will be an improvement and further testing, and after seven generations, a marketable variety should be established.

We are aiming for:

(1)     Higher yield, closer to global standards.

(2)     Higher Oil content

(3)     Better Nutritional value

The most advanced procedures that are available to expedite variety development, such as, DNA marker technology, state of the art genomics, and fingerprinting procedures will be available to the JV via our partners, to accelerate modern variety development for India.

Further, the objectives of the JV can be achieved at an accelerated rate due to the presence of multi-seasons and trials in India as well as with the use of off-season nurseries to rapidly advance generations.

We have already imported material from different parts of the world which is being crossed with Indian soyabean varieties at our research farms in India. These procedures should not be mistaken with genetic modification of any sort.

At this point, I would like to reemphasize the difference between Genetically Modified or GMcrops and Non GM crops and why India is pro Non GM.

GM crops create something that is not found in nature. A particular gene is isolated from another species and transferred to another. For example, GM Soyabeans contain a strain from a bacteria that makes it resistant to herbicide.

However, The JV will not engage in any genetic modification.

What the JV is doing is simply exchanging pollen between the same species using the most advanced methodologies available, to breed offspring that have desired characteristics.

North and South America have both turned to GM Soyabean development, to much controversy from the rest of the world.

The European Union, Japan, UK and Australia have banned the use of GM foods due to risks that have not been specifically identified and are unsure of their safety for human consumption.

This JV plans to systematically increase the Non GM crop availability in India and solidify India’s position as the number 1 producer of Non GM Soyabeans in the world. This will facilitate trade flows at substantial premiums.

Finally, I would like to highlight what the future might look like for soyabeans in India.

Reiterating what my father said, this JV has the potential to spark another soya revolution in the country.

We plan to introduce one or more varieties that -

(1)       Will improve the balance of trade by Reducing vegetable oil imports due to potential yield increases and increasing Non GM soyabean Meal exports

(2)       We will also aim to improve the nutrition level available to the masses via higher calorific values, higher protein content and nutrients such as oleic acid

(3)       We will help the Government provide Food security to its citizensby increasing domestic supply, increase the maturity range, enhance oil content, and breeding drought, disease and pest tolerant varieties which will mitigate the risk of crop failure.

(4)       We will also attempt to addneutraceutical properties that can help to control cardiovascular diseases, cancer, osteoporosis and kidney disorders

To put the results in a different way:

Even if the yield is improved from the current levels by 30 percent and the oil content by 2 percent

That essentially means, assuming same acreage planted,

An Additional 3.6 Million Soyabeans and 960,000 TONNES of Soyabean Oil is produced

An Additional 2.9 Million TONNES of Soyabean Meal is produced

At current prices of  1100 USD/TONNESfor oil 500 USD/TONNES price meal, this would mean reduced imports and increased export receipts to the tune of 2.5 Billion USD for the Country.

Additionally,

Ruchi Soya, being the largest crusher and processor of Soybeans in India, with an annual crushing capacity of 4.1 MillionTONNES/Annum ( or25 percent of the country’s existing supply) will benefit via

(1)       Higher capacity utilisation and reduction of supply bottlenecks due to weather shocks and low crop availability

(2)       Non GM premiums for Soyabean meal exports to the European Union and other Non GM consumers

(3)       Substantial Reduction of import dependency and insulation from world supply shocks thereby controlling inflation

(4)       Food Grade and specialised soyabean development and product diversification

(5)       Seed Marketing and further supply chain integration

Furthermore, Ruchi will continue to support the Indian farmer aswe recognize the importance that Soyabeans have as a food source for Indians. This Joint Venture is a substantial investment into Research and Development that we feel will have a far reaching impact on the Indian Agricultural landscape.

Many thanks to all the people involved and I look forward to making this a success with you.

Thank you.