Global War, Local Collapse: Madhya Pradesh's Soy Economy Takes Direct Hit

Madhya Pradesh's soybean market, despite bumper production, is on the verge of collapse because of the Iran-US war, which has upended global supply chains. The state, where nearly half of India's soybeans are grown, is reeling under falling global demand for the Indian product.

The ongoing conflict in West Asia has disrupted critical shipping routes, triggering a chain reaction that is now crippling India's soybean meal exports. The numbers are stark -- exports are expected to fall by nearly 50 per cent in March, dropping from 93,000 tonnes in February to just 40,000-50,000 tonnes. Exporters warn that April could be even worse.

Soymeal, a key high-protein ingredient used in poultry and livestock feed, is one of India's major export commodities -- which has markets in West Asia, Europe and East Africa.

At mandis across Madhya Pradesh, traders report falling demand and rising uncertainty.

At Karond mandi in Bhopal, Devraj Gurjar from Imaliya, who supports a family of 12 on his six-acre farm, said: "I sold my soybeans for Rs 3,780 per quintal now, with the ongoing market struggle, they will likely purchase even for less. The fear among us is palpable...The cost of preparing just one acre of soybean field runs up to Rs 9,000-Rs 10,000."

Beside him, Vikram Gurjar from Azmat Nagar said it is a foregone conclusion that Soy prices will fall.

"What is there to fear? It is a foregone conclusion that soybean prices are going to fall," he said.

In Sehore, Jagdish Gurjar, who cultivates just four acres to sustain a family of ten, fears a sharp collapse in profits.

"I previously sold my soybeans at a rate of Rs 3,700. Now, I fear the price might plummet to as low as Rs 2,500 per quintal," he added.

Industry experts say this is not just a temporary disruption.

DN Pathak, Executive Director of the Soybean Processors Association of India (SOPA), told NDTV," Indian soybeans are significantly more expensive than those in the global market, so we are already priced out of the competition. Furthermore, the crisis in West Asia, which has disrupted shipping lines and compromised trade routes, is preventing exporters from sending out shipments. Consequently, even the limited volume of exports that was previously taking place has now been stalled. Since Madhya Pradesh accounts for the bulk of our soybean exports, a decline in exports will inevitably impact prices, and this will certainly have repercussions for the farmers".

Indian soymeal is currently priced at $500-$505 per tonne, while Brazil and Argentina are offering the same at $420-$430, making Indian products uncompetitive in global markets. As a result, major buyers like Iran and other Middle Eastern nations have cut back purchases, leading to a pile-up of stocks within the domestic market.

"India's yield is merely one-third of that of Brazil and Argentina, while prices are substantially higher than theirs. There appears to be no immediate solution to this disparity, nor is one visible on the horizon. Until we can increase our productivity per ton, our competitive capacity will remain stagnant. The government needs to focus its efforts on boosting yields, a metric that has remained stagnant for the past 25-30 years. While we may not be able to match the yields of Argentina and Brazil, given the vast scale of their agricultural landholdings, we can certainly strive to improve our own productivity," he added.