Soybeans and poultry

Last week, this column wrote about the increasing soybean imports in Pakistan (“Soybean: A transition in process,” published May 10, 2017). Today, we take the discussion further, discussing the impact of higher soybean imports the current policies on the poultry sector.

All oilseeds were subject to import duty GST – sunflower, canola, and soybean all had a 176 percent duty sales tax on them. However, the duty GST on soybean was brought down to six percent. Meanwhile, the import duty on soybean meal was increased from five percent to ten percent (in addition to 10 percent sales tax). This hurt the poultry sector; 15-20 percent of Pakistan’s poultry industry relies on soybean meal as feed. In addition, import permits from India were canceled by the Ministry of National Food Security & Research over allegations of the imported meal being ‘haram.’ So, soymeal became expensive to import and the local solvent extractors could charge the higher rate for it.

BR Research spoke to the Chairman of the Pakistan Poultry Association, Khalil Sattar, who said the policies only benefit the solvent extractors. He said that soybean is a protein seed and not an oilseed, as it contains just 17 percent oil, compared to sunflower seed and canola, which contain 47 percent and 43 percent oil, respectively. He added that the reduction in soybean duty has cost the government over Rs2.6 billion in lost revenues; according to a study conducted by poultry analysts, the import of soybean for production of oil and meal yielded revenue of Rs6,037 per tonne against direct imports of oil and meal yielding revenue of Rs8,695 per tonne. He added that the reduction in soybean duty has cost the government Rs2.52 billion in lost revenues.

It must be noted that soybeans are not grown locally. Soybean was first introduced as an oilseed crop in Pakistan in the 1960s but could not flourish. Currently, the area under soybean cultivation is negligible and it has no role in edible oil and soymeal production. Since its inception, the solvent industry has been extracting oil from cottonseed, rapeseed, canola, and sunflower seed, but only during the past couple of years has it started using soybeans, which only gives 17 percent oil and 75 percent meal.

The strong demand for unprocessed soybean imports has been created by higher import duties on processed soymeal. And while this column maintains that locally produced items are better than imports, bear in mind that the beans are being imported in the first place – and that too, after taxing soymeal through the nose.Essentially, the industrial process (of crushing soybeans to produce oil and meal) is what is being promoted here.