The Hindu Business Line : China factor may buoy groundnut exports

THE `China' factor coupled with a shortfall in world carryover production is likely to lead to rise in export of Indian groundnuts, according to the Indian Oilseeds and Produce Exporters Association (IOPEA).

IOPEA members, who recently visited China, said a reduction in Chinese exports should augur well for India. (Please see accompanying table)

"Chinese groundnut export is expected to drop by 50 per cent this year. In fact, one company reported that it could be as low as 2 lakh tonnes as against the regular 7 lakh tonnes export. However, with high economic growth and more disposable income, the consumption of groundnuts in China is on the increase. In fact, for this year, we have already exported around 50,000 tonnes more than normal (with another 40,000 odd tonnes of groundnut export in the pipeline) due to slow Chinese offering in the world market, " Mr Kishore Tanna, IOPEA chairman, said. Mr Tanna was leader of the delegation that visited China in a bid to understand the market there and strengthen trade relations.

With regard to small nuts, there is a perception that Chinese exporters find themselves uncompetitive against India. It is felt that there will be opportunities to export groundnut kernels to China. However, export consignments will have to meet aflatoxin specifications.

As regards to sesame seeds, in the backdrop of growing domestic consumption of all food products, it is expected that China would continue to import substantial quantities of the commodity. "Over the last decade China has been importing some quantity of sesame seeds from other origins. Depending on the local requirement, this quantity has varied from a low of 1,000 tonne in 1999 to as high as 65,000 tonnes in 2003. Besides official imports, large unaccounted quantity is also brought in from Myanmar and Hong Kong for which no details are available," Mr Tanna said.

Terming 2003 as one of the finest year for IOPEA, Mr Tanna said the Chinese output of sesame seed crop 2003/04 was substantially lower than normal as was quality.

"A bad crop is what has brought about this shortfall. However, even if they have good, normal rains, buying from China will not come down," he added.

Commenting on the surge in sesame exports from India to China, he said Chinese importers were of the view that last year was a special one in which the Chinese crop was exceptionally low due to weather conditions.

"We were told that Chinese importers will find import parity when offers are made for sesame seeds at a discount of 30-35 per cent compared to local Chinese prices. However, one message communicated emphatically was that China is a quality market and will pay the right price for the right quality," the IPOEA Chairman said.

Imported sesame seed consignments attract a duty of 10 per cent and VAT of 13 per cent. Effective tax incidence combining these two is thus 24.3 per cent, cost of clearing consignment is about $20 per mt. Quality requirements in China are quite stringent and all import consignments are being checked by CIQ (Chinese inspection and quarantine).

This year CIQ has been stringent with few sesame seed (and other food products) consignments and is expected to influence and control imports more effectively in future.

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