overview on export market opportunities for sorghum icar- indian institute of millets research...
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Overview on Export Market Opportunities for Sorghum
ICAR- Indian Institute of Millets Research (IIMR)(Formerly DSR)
Hyderabad-500030, www.sorghum.res.in
B Dayakar Rao Principal Scientist [email protected]
Sorghum
• Versatile C 4 plant & drought tolerant
• Climate change complaint
• Whole plant utilization & high biomass crop
• Nutritionally rich- human and livestock health
• Industrially amenable crop
• Potential to offer food, nutritional, climate, livelihood & climate security
World Sorghum scenario
The world sorghum economy consist of two distinct sectors1. A traditional, subsistence smallholder farming
sector (mainly in Asia and Africa)
2. A modern , mechanized, high input, large scale sector, output is largely as animal feed(developed countries and in Latin America)
World major Sorghum producers ( TE 2013)
Comparative World vs. India Area trends (M ha)
Comparative World vs. India Production trends (M tonnes)
Comparative World vs. India Yield trends (Kg/ha)
Sorghum In India
• India is 3rd largest producer of sorghum in World.• One of major staple crop after rice, wheat, maize and bajra
in India.• In India it is grown economically as dual purpose crop
viz., grain and fodder• It is primarily produced in Maharashtra, and southern
states of Karnataka, Telangana and AP. Other states include MP, Rajasthan, Gujarat, Tamil Nadu and UP .
• 95% of country’s production comes from above 4 states.• Sorghum play an important role in the livelihoods of 60
millions rural people in the semi arid tropics of India and also causing major contribution to the diets of 20 million bovines (Hall 2000)
Sorghum Utilization
• Only rainy-season sorghum is used for industrial purposes-Even exports
• Post rainy-sorghum is a highly valued food grain (bold grain, white color and sweeter taste) is of superior quality, and thus too expensive to be used as industrial raw material
• Animal feed sector, alcohol distilleries, and starch industries
• 3–5% of rabi sorghum is used in the processed food industry & 5% is used to prepare rotis sold at restaurants
• Rabi sorghum prices are higher by 20–40% compared to kharif sorghum grain (Parthasarathy et al 2010)
Grain Sorghum
Rabi
(mainly varieties, a few
hybrids)
Food use–direct grain consumption Food & Feed grain
Exports (feed)
Industrial &
non-food uses
Processed foods
•Bakery products•Cake & biscuits•Snack food
Blackened grainNormal grain
Starch & Derivatives
•Liquid & powder glucose•Modified starches •Malto dextrins•High fructose syrup
Ethanol
(Potable)
Feed
•Poultry•Animal
Late Rabi
(early hybrids)
Kharif
(mainly hybrids)
Grain sorghum marketing and utilization
Availability and Utilization pattern of sorghumYear Availab
ility (M tonns)
Consumption (M tonns)
Seed (M tonns)
Wastage (M tonns)
Industrial uses (M tonns)
Share of food consumption to avl (%)
Share of industry uses (%)
Share of seed uses (%)
1977-78 11.47 11.42 0.15 0.01 0 100 0 1.3
1982-83 11.59 10.80 0.15 0.01 0.63 93 5 1.3
1987-88 11.75 9.92 0.14 0.01 1.68 84 14 1.3
1993-94 10.99 7.52 0.11 0.011 3.35 68 30 1.0
1999-00 7.92 5.22 0.08 0.008 2.62 66 33 1.0
2000-05 7.16 4.83 0.07 0.007 2.25 67 31 1.0
2008-09 7.49 4.26 0.06 0.006 3.07 57 41 1.0
Sorghum utilization: • The share of consumption for alternative uses was highest
i.e. 48%in 2004–05 (Parthasarathy 2010)• Estimated figures for alternate uses is 54% by 2020
(Dayakar 2010) • Decline in All India PCC of sorghum was due to decline
in food consumption of kharif sorghum while the decline was more or less constant for rabi sorghum.
• Emerging Value added/ processed products • Diversified food utilization spreading gradually -
alternative health/ convenient foods through increasing awareness among health conscious urban population.
Per capita consumption of sorghum in Rural & Urban areas (kg/month)
PER CAPITA CONSUMPTION OF SORGHUM IN RURAL & URBAN AREAS (KG/MONTH))
Sorghum Utilization Estimations 2020
Global trade
• World sorghum markets are thin and highly competitive
• US is an important player in world sorghum market and benefits from highly efficient and subsidized production
• In low income countries of Asia and Africa Sorghum grain is traded as it is a staple food while it stover is meant to meet livestock fodder requirements for draft/ diary animals
• In high income countries, sorghum grain is known to be traded for feeding cattle (50% of sorghum in the world)
• Sorghum is grown in 60 countries, world trade of sorghum is estimated to be around 8 to 10 million tonnes, the major importers being Japan, Venezuela and Mexico.
Major sorghum exporting countries (Qty in M tonnes)
Country 2007 2008 2009 2010 2011
USA 5.70 5.31 3.75 3.88 3.36
Argentina 1.07 1.18 1.05 1.66 1.85
China 0.24 0.12 0.04 0.04 0.07
France 0.07 0.08 0.08 0.10 0.07
India 0.04 0.09 0.08 0.13 0.04
Major sorghum importing countries (Qty in M tonnes)
Country 2007 2008 2009 2010 2011 Average
Mexico 1.88 1.55 2.50 2.25 2.38 2.11
Colombia 0.07 0.14 0.19 0.17 0.47 0.21
China 0.17 0.12 0.00 0.00 0.01 0.06
Major sorghum importing countries (Value in 1000 USD)
Country 2007 2008 2009 2010 2011 Average
Mexico 0.35 0.36 0.44 0.43 0.69 0.45
Colombia 0.01 0.03 0.04 0.03 0.13 0.05
China 0.04 0.04 0.00 0.00 0.00 0.02
Others 0.00 0.00 0.00 0.00 0.00 0.00
Major sorghum exporting destinations from India (Qty in tonnes)
Country 2007 2008 2009 2010 2011Averag
ePakistan 943 4436 15458 29872 6831 11508
China 7403 15802 2153 3578 3173 6421.8
Egypt 1800 1133 655 946 902 1087.2Netherlands 10214 230 - 389 - 3611
Saudi 4787 1389 3696 5154 2073 3419.8Sri lanka - 26352 3136 2370 2 7965
UAE 1481 1074 1961 4992 2079 2317.4
UK 1 10 84 52 234 76.2
Kuwait 1048 757 1170 933 1017 985
Japan 6 112 263 399 178 191.6
Major sorghum exporting destinations from India (value in Million US $)
Country 2007 2008 2009 2010 2011Avera
ge
Pakistan 0.47 1.95 4.96 9.55 4.38 4.26
China 1.65 4.04 0.57 1.04 0.98 1.66
Egypt 0.44 1.21 0.71 1.35 1.14 0.97
Kuwait 0.30 0.23 0.34 0.30 0.34 0.30
Netherlands 2.03 0.08 - 0.132 - 0.44
Saudi Arabia 1.39 0.45 1.14 1.58 0.73 1.06Sri Lanka - 5.80 0.61 0.56 - 1.39
UAE 0.32 0.28 0.44 1.51 0.62 0.63
UK - - 0.02 0.01 0.08 0.02
Japan 0.01 0.16 0.14 0.17 0.08 0.01
Comparison of US and India domestic market prices of Sorghum (in Rs/qtl)
Average Sorghum and Maize Wholesale prices in India (Rs/qtl)
Average Sorghum (30% Less price) and Maize Wholesale prices in India (Rs/qtl)
Comparison of Sorghum and Maize International Market Prices (in USD)
Background of Indian sorghum exports
Only rainy-season grain could emerge as a possible choice for export. Indian sorghum is gradually becoming competitive in the international market, largely due to the depreciation of Rupee over the US$. the quality of this grain doesn’t measure up to international tradestandards due to molding and other postharvest handling problems. APEDA have banned its export Moreover, the Government of India fixes annual quota Of coarse grains meant for export (50000 t in 1997/98 & 23900 t in 1998/99) which is invariably availed by maize.Between 1993 and 1995, small quantities of sorghum ranging between 3100 -71900 t were exported, mostly to the Gulf.
Domestic and International sorghum price instability indices
Year International prices
Domestic price stability
1960-70 6.5 6.07
1970-80 21.37 6.29
1980-90 17.17 4.58
1990-00 15.39 8.69
2000-10 38.50 36.80
•Instability of sorghum showed that domestic prices were less volatile than international prices during the past four decades (case 1),•While in the recent past the trend has been the domestic prices were on par in volatility that of international prices (case 2).•In case 1, any uncontrolled sorghum import could impart instability in to the domestic sorghum prices. The price volatility could affect farmers in the long run. •Therefore, the domestic prices have to be protected against international price volatility. • Grain quality factor of Indian sorghums has an edge over others in the international market. • However, Indian sorghum exports are found to be non-competitive till some time ago in the international markets from NPC calculations• The average NPC at OER in 2004 (Dayakar et al 2004) were found to be 1.42 for Maharashtra, indicate that sorghum is not an export competitive crop in India.
India’s Export Competitiveness of Sorghum• Export market opportunities for sorghum- food, feed,
consumer and industrial products.
• NPC (Nominal Protection Coefficients) to determine country 's comparative advantage in export of that commodity in a free trade scenario
• It is ratio of domestic price of sorghum to world reference price which is adjusted to transportation cost, packing cost, port clearing charge, insurance etc…
• If NPC > 1, it means commodity is protected under free trade and
• If NPC < 1, means the commodity is not protected.
Nominal protection coefficients (NPC) of sorghum exports for different countries
S.No Country NPC
1China. Taiwan province of
1.58
2 China 1.58
3 Egypt 0.45
4 Eretria 1.54
5 Kenya 1.31
6 Malaysia 1.60
7 Oman 2.38
8 Pakistan 1.09
9 Philippines 1.59
10 Saudi Arabia 1.29
11 UAE 1.76
12 Yemen 1.32
• Under exportable scenario, competition is assured to take place at foreign port so domestic commodity has to be extra efficient to be in tune with International transportation costs at least.
• Exporting to Oman, UAE, Malaysia, Philippines and China has a positive outlook.
India’s Export Competitiveness of Sorghum:
NPC of sorghum exports for year wise
Year NPC Values
1998 0.86
1999 0.74
2000 0.88
2001 1.07
2002 1.03
2003 1.02
2004 1.02
2005 0.93
2006 0.75
2007 0.79
2008 1.01
SWOT of Indian sorghum exports
Strengths:• Climate change compliant
• Future crop- dryland crop with low water requirement
• Nutri cereal- health-supported by solid data
• Ensure good quality of ethanol/neutral blend
• offers celiac a gluten free option
• Strong R&D institutional support
• Superior quality as Indian sorghums are food types
Weaknesses:• Relatively lower production and productivity of sorghum,
higher per unit cost of production
• Scattered production; mostly away from sea coast- higher marketing cost.
• Low marketed surplus-subsistence cultivation
• Low shelf life (especially flour made from grain)
• Lack of awareness of nutritional & food quality of sorghum across the globe
• Food safety and phyto-sanitary regulatory issues
• Severe blackening of rainy season grain
• Poor export infrastructure may provide deterrent as the export quotas imposed in the past (Day 1997)
Marketed Surplus Ratio of Sorghum
State 2007-08 2008-09 2009-10 2010-11 2011-12Andhra Pradesh 57.59 39.46 56.43 31.61 65.49
Karnataka 58.84 47.98 94.58 76.88 46.37Madhya Pradesh 75.87 64.83 79.42 68.39 73.44
Maharashtra 61.03 59.01 51.35 56.87 48.06
Rajasthan 60.91 45.66 87.99 64.86 66.17
All India 61.47 54.60 65.00 62.03 53.46
Opportunities• Increased demand due to renewed interest on renewable
energy sources
• Niche markets eg. gluten free products markets
• Need for alternative Nutri cereal across the world
• Policy favor in recent times
• Involvement of private sector in its promotion in food/seed/ biofuel sector.
• Superior R&D to cater export specific needs such as red sorghums
• National/ international attention due to institutionalization of R&D support
Threats
• Consideration of sorghum as a valued food grain
• Major players like US with highly subsidized production keeps low International prices makes exports difficult for India
• Other players in Asia such as Thailand have advantage over India with better port facilities for handling grain exports
• Low export competitiveness
• Organized actors from developed economies
• Disfavor of domestic policies with regard to biofuels production and export
Export potential of Indian sorghum
• Target neighbouring countries as such countries find that the sorghum traded in international markets is relatively costlier because of – high shipment cost & – market intelligence cost.
• The prospective of future sorghum research needs has to be reoriented with specific emphasis on product-line based approach.
• A strategy for export of feed grain may demand development of suitable high yielding feed grain hybrids suiting to mechanised farming and appropriate storage and handling infrastructure and proximity port.
• With selective breeding, some of the nutritional limitations of sorghum grain could be overcome.
Export potential of Indian sorghum
• USA and European Union (EU) member countries –subsidized production that include export subsidies and provide quite a high degree of protection -domestic crops - reason for “reduced” International prices of sorghum
• Once the subsidies in the western countries are brought down or scrapped, India may grab a comparatively advantageous position in sorghum export.
• Feed grain export strategy may demand development of suitable high yielding feed grain hybrids suiting to mechanised farming and appropriate storage and handling infrastructure.
• Also cultivation of export quality sorghum such as red sorghum which has international market in the comparatively advantageous economic zone of our country would better export competitiveness of sorghum.
Export potential of Indian sorghum
• With the current rate of production and utilization, India has a surplus production, China and middle-east may be attractive markets. This provides ample opportunities for India to emerge as an exporter of sorghum in the Asian region.
• High production environments Trade prospects over longer distances may be best developed in areas where productivity is higher and more consistent
Bio Ethanol Production in the world
Brazil and US ethanol production
Ethanol imports and exports
Ethanol prices Brazil Vs US
Conclusions1. kharif sorghum production- serious efforts to address problem of
stagnation of area by targeting it to different end use utilization – target product specific improved cultivars to compete with close substitutes-to make it competitive in feed industry for export markets wrt maize which is now diverted for ethanol production
2. Emerging business opportunities may be properly exploited for gaining exports such as diversification of export basket- niche markets like glutenfree, sweet sorghum syrup, alcoholic beer, stalks based ethanol/grain based potable spirit, value added nutri RTE/RTC foods etc.,
3. Involving farmers as stakeholders through inclusive approach for better share in consumer rupee through education on export markets
4. Bringing large stretches of areas specifically to meet the specific export demand through collective farming
5. Conducive policy frame work and institutional support for promotion of exports
Value added foods
Conclusions contd…6. High production environments nearer to ports to bring down cost of production
through higher productivity and low cost technologies that are export competitive
7. Enhancing infrastructural facilities (storage of grain ) and logistic support for handling the grain exports to make sorghum export competitive
8. Policy makers should enable forward linkages which enable an assured price to the growers through contract farming , bulk marketing while the industry can expect bulk supplies of the required quality grain
9. Research efforts to address the quality and technological constraints to make rainy sorghum more amenable for export markets. Crop improvement for special industrial uses variety traits for special industrial applications of exportable value
10. Attaining higher export competitiveness lies in reducing per unit cost of
production hence the domestic price of sorghum. – lowering domestic prices (by reducing cost of transportation, freight) and
– reducing cost of production (higher productivity efficiency and technological innovations).
Reinventing of Sorghum as health & convenient food is in
offing!
Constraints in utilization for trade in sorghum:
In general, the prospects for greater sorghum trade are constrained1. Variability of production levels
2. High costs of collection & transport from outlying production areas
Technical constraints• Animal feed for increased utilization- mycotoxin
contamination, tanin &energy levels of different sorghum varieties.
• Long term storage options need to be examined exports for decentralized PDS.
• Institutional arrangements for scientific and technology support of these initiatives with various stakeholder organizations involved
Market and policy constraints:
• Lack of closer integration of industrial users/trader and sorghum producers.
• Need for conducting study on implications of sorghum utilization due to trade/ liberalization on functioning of sorghum grain markets
Institutional constraints to uptake postharvest technology
• the divergence and weak linkages between private enterprise and public sector research in India.
• Lack of technology research on sorghum to bridge the installation gap and interactive approach to problem solving.
• Lack of Knowledge creation process that link science with crop clients.
• Crop improvement for special industrial uses variety traits for special industrial applications of exportable value
• World sorghum markets are thin and highly competetive• Indian sorghums earlier are- import competitive and not
export competetive• US is an important player in world sorghum market and
benefits from highly efficient and subsidized production• Other players in Asia such as Thailand have advantage over
India• Indian port handling facilities are known to inefficient for
grain export which is generic problem• Poor export infrastructure may provide deterrent as the
export quotas imposed in the past (Day 1997)
• WTO - Indian agricultural trade policy is legislated to be fully liberalised in the short- to medium-term, the current import and export quotas will be abolished and decannalised). • Some tariffs will remain at levels agreed under WTO rules• Trade liberalization, in combination with the reduction of input subsidies & the removal of the ECA will favor the production of sorghum, i.e., more attractive option for farmers than other crops (ICRISAT 1999)• It will benefit farmers already growing the crop, & some to revert to it, although major shifts should not be expected. This will be more so in areas producing hybrid rainy-season sorghum and less so in past rainy- season sorghum areas• In other words, changes will lead to farmers being able to grow a' best bet‘ crop suited to their production environments. • Access to imports would allow non - food use of sorghum to develop specialization in certain industrial sectors because of its impact on price stabilization. • Equally, access to export markets would benefit procedures in surplus years and in years when world market prices rose significantly.
Factors for higher NPC of Indian sorghum export
1. Lower production and productivity of sorghum
2. Higher per unit cost of production
3. Consideration of sorghum as a valued food grain
4. Use of sorghum as a cattle feed in other industrialized and developed countries hence low price
5. Heavy subsidies offered by major sorghum producers like USA to sorghum cultivation which keeps its international price low etc