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 1/6th 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.
Thank
you.
