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Title: Overview on Export Market Opportunities for Sorghum


1
Overview on Export Market Opportunities for
Sorghum
B Dayakar Rao Principal Scientist
dayakar_at_millets.res.in
  • ICAR- Indian Institute of Millets Research (IIMR)
  • (Formerly DSR)
  • Hyderabad-500030, www.sorghum.res.in

2
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

3
World Sorghum scenario
  • The world sorghum economy consist of two
    distinct sectors
  • 1. 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)

4
World major Sorghum producers ( TE 2013)
Country Area harvested ( M Ha) Production (M tonnes) Yield (ton/Ha)
USA 2.64 (3) 9.88 (1) 3.74
Nigeria 5.50 (2) 6.70(2) 1.22
Mexico 1.69 6.31(3) 3.74
India 6.18 (1) 5.28(4) 0.85
Ethiopia 1.85 4.34 2.35
Argentina 0.89 3.64 4.09
5
Comparative World vs. India Area trends (M ha)
6
Comparative World vs. India Production trends (M
tonnes)
7
Comparative World vs. India Yield trends (Kg/ha)
8
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 countrys 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)

9
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
  • 35 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 2040 compared
    to kharif sorghum grain (Parthasarathy et al
    2010)

10
Grain sorghum marketing and utilization
11
Availability and Utilization pattern of sorghum
Year Availability (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
12
Sorghum utilization
  • The share of consumption for alternative uses was
    highest i.e. 48in 200405 (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.

13
PER CAPITA CONSUMPTION OF SORGHUM IN RURAL
URBAN AREAS (KG/MONTH))
Per capita consumption of sorghum in Rural
Urban areas (kg/month)
14
Sorghum Utilization Estimations 2020
15
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.

16
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
17
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
18
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
19
Major sorghum exporting destinations from India
(Qty in tonnes)
Country 2007 2008 2009 2010 2011 Average
Pakistan 943 4436 15458 29872 6831 11508
China 7403 15802 2153 3578 3173 6421.8
Egypt 1800 1133 655 946 902 1087.2
Netherlands 10214 230 - 389 - 3611
Saudi 4787 1389 3696 5154 2073 3419.8
Sri 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
20
Major sorghum exporting destinations from India
(value in Million US )
Country 2007 2008 2009 2010 2011 Average
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 1.06
Sri 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
21
Comparison of US and India domestic market prices
of Sorghum (in Rs/qtl)
22
Average Sorghum and Maize Wholesale prices in
India (Rs/qtl)
23
Average Sorghum (30 Less price) and Maize
Wholesale prices in India (Rs/qtl)
24
Comparison of Sorghum and Maize International
Market Prices (in USD)
25
  • 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 doesnt measure up to
    international trade
  • standards 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.

26
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
27
  • 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.

28
Indias 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 gt 1, it means commodity is protected under
    free trade and
  • If NPC lt 1, means the commodity is not protected.

29
Nominal protection coefficients (NPC) of sorghum
exports for different countries
S.No Country NPC
1 China. 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
30
Indias Export Competitiveness of Sorghum
  • 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.

31
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
32
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 RD institutional support
  • Superior quality as Indian sorghums are food
    types

33
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)

34
Marketed Surplus Ratio of Sorghum
State 2007-08 2008-09 2009-10 2010-11 2011-12
Andhra Pradesh 57.59 39.46 56.43 31.61 65.49
Karnataka 58.84 47.98 94.58 76.88 46.37
Madhya 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
35
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 RD to cater export specific needs such
    as red sorghums
  • National/ international attention due to
    institutionalization of RD support

36
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

37
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.

38
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.

39
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

40
Bio Ethanol Production in the world
41
Brazil and US ethanol production
42
Ethanol imports and exports
43
(No Transcript)
44
Ethanol prices Brazil Vs US
45
(No Transcript)
46
Conclusions
  • 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
  • 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.,
  • Involving farmers as stakeholders through
    inclusive approach for better share in consumer
    rupee through education on export markets
  • Bringing large stretches of areas specifically to
    meet the specific export demand through
    collective farming
  • Conducive policy frame work and institutional
    support for promotion of exports

47
Value added foods
48
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).

49
Value chain in Sorghum/Millets
dayakar_at_millets.res.in
50
Reinventing of Sorghum as health convenient
food is in offing!
51
Constraints in utilization for trade in sorghum
  • In general, the prospects for greater sorghum
    trade are constrained
  • 1. 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

52
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

53
  • 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)

54
  • 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.

55
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
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