The opening up of the animal feed market for US imports at preferential tariffs would not impact local producers as enough safeguards in the form of quotas have been built into the agreement, according to the ministry of commerce.
Strategic Quotas
The quota for the US for Dried Distillers Grains with Solubles (DDGS) in the interim trade framework has been 5 lakh tonnes which is just 1% of the total consumption, they said.
DDGS is high-protein byproduct of ethanol production, rich in energy, fiber, and amino acids It is widely used in cattle feed to boost milk production and weight gain while replacing more expensive protein sources like soybean meal.
Due to rising demand for animal products the demand for animal feed is increasing, particularly corn (200 lakh tonnes) and wheat (65 lakh tonnes) soybean meal (62 lakh tonnes), which together account for nearly two-thirds of total feed consumption of 500 lakh tonnes. Domestic feed supply is increasingly constrained by limited arable land and productivity gaps.
Currently imports more than 6 lakh tonnes of animal feed with supplies coming from Sri Lanka, China, USA, Thailand, Nepal.
Balancing Domestic Supply
India’s soybean imports are 6 lakh tonnes from Niger, Togo, Benin, Mozambique and corn imports are 9 lakh tonnes from Myanmar, Ukraine, Singapore, UAE.
DDGS will supplement domestic feed availability and help meet rising demand without diverting food grains from human consumption, the ministry said. The opening up of the feed variety from the US diversifies sources from other countries and reduces soybean and corn imports for feed purposes. DDGS also reduces pressure on domestic corn and soybean markets, supporting availability and affordability of staple food grains.
The clarification from the ministry addresses fear among traders that uncontrolled entry of American DDGS could have a cascading impact on prices of domestically produced DDGS, volumes of which have increased significantly due to the country’s large production of grain-based ethanol.
Additionally, this could also affect India’s soymeal pricing, which has already dropped sharply over the past few years due to its wide replacement by DDGS in animal feed.