China could emerge as a major buyer of groundnut meal, rapeseed meal, groundnut oil and sesame seed from India if quality and delivery were guaranteed.
In addition, there existed adequate scope for setting up joint ventures and units to process rice bran and possibility of transfer of know-how to upgrade medium-size solvent extraction plants, the Indian delegation that recently visited China has concluded.
A 13-member Solvent Extractors' Association of India team went to China at the invitation of China National Vegetable Oil Association. The visit was sponsored by ministry of commerce of the government of India.
In view of high price of soybean meal, demand for other protein meals like groundnut meal and rapeseed meal had gone up. India could supply these items.
In the current season, China bought about 80,000 tonnes of groundnut meal and 50,000 tonnes of rapeseed meal from India.
The delegation included oilseed crushers, oilcake, rice bran and vegetable oil processors, commodity brokers and technocrats. D P Khandelia, president of SEAI, and G G Patel, deputy leader and past president of SEAI.
The delegation held meetings with Gao Xiushan, president of CNVOA, and Liu Tongzhan, general secretary of the China Feed Industry Association, at Beijing, Harbin, Shanghai, Nantong and Guangzhou between 16 and 25 April.
The Chinese planting area of oilseed had increased in 2003 compared with 2002 but production stagnated at the 2002 level. This was because of a smaller groundnut crop in 2003 owing to natural disasters.
According to the official research institute, the total Chinese production included eight oilseeds - soybean, groundnut, rapeseed, cottonseed, sesame seed, sunflower seed, linseed and castor seed. The crop size was 52.7 million tons (mnt).
The total oil production in China was about 10mnt, while about 20mnt of soybean seed was imported, equivalent to 3.6mnt of soybean oil. China also imported 5.5-6mnt of vegetable oil, mainly palm oil and soyaoil. The total Chinese demand for edible oil was approximately 18-19mnt.
Imports of oil and oilseed shot up in 2003.According to data released by China General Administration of Custom, the total quantity of imported oil, including oil converted from seed, touched 9.58mnt, up 67 per cent from 2002.
The total import quantity exceeded the promise made by China when it entered the WTO. Soybean oil import was at 1.88mnt, up 116.5 per cent. Palm oil import at 3.22mnt was up 48.7 per cent.
Rapeseed oil import at 0.152 million tons was higher by 94.8 per cent. Soybean imports touched 20.74mnt in 2003 from 11.32mnt in 2002, up 83.3 per cent. Export of vegetable oil was 60,000 tons, down 38.7 per cent . Export of oilseed was 0.94 mnt, up 1 per cent.
The delegation noticed three changes in the Chinese vegetable oil market. First, huge imports of oilseeds and vegetable oils had led to increase of closing stocks of goods like oil, oilseed and meal.
Industry sources estimated the closing stock of soybean to be about 5mnt and of vegetable oil to be around 2mnt. Soybean meal stocks were also high but the level was not disclosed.
Secondly, prices appeared to be recovering despite volatility. Thirdly, new plants were coming up and old processing units were being expanded. This has led to a rise in investments in the sector. However, average capacity utilisation of processing units was less than 50 per cent.
The delegation said the Chinese government was concerned about the stagnant crop size, including the oilseeds crop. To motivate farmers, the Chinese government was proposing to abolish income-tax on farming.
It had recently announced subsidy of 150 yuan ($18) per hectare to encourage farmers to switch over from vegetable and fruit to soybean.
Till 1995, China imported oil and oil meal and was the largest importer of edible oil. In the last five years, China switched from importing oil and meals to import of oilseeds.
Restructuring of the sector was taken up through creation of processing capacity along coastal areas. This led to closure of units in the interior areas.
According to trade estimates, Chinese per capita consumption of edible oil was 13-15 kg. The official population figure for of China was 1.27 billion.
Rapid economic growth in China was expected to lead to shortages. In contrast, India was expected to be a resource surplus country.
The Chinese would prefer to have collaborative relationship with India rather than a competitive one, the delegation members said in a press conference.
