Reviving Pakistan's Soybean Imports: Regulatory Approvals and Future Prospects in MY 2023/24

Published 2023년 12월 20일

Federal Cabinet of Pakistan allowing the import of GE commodities brings a positive outlook for the soybean industry in the country as this may lead to Pakistani soybean imports resuming. Previously, the government ceased soybean imports in Oct-22, resulting in a decline of 86% YoY to 248,000 mt in the MY 2022/23. This restriction significantly affected soybean processing, causing a shortage in soymeal used for poultry feed. However, following a hiatus of more than a year due to regulatory constraints, the recent news granting access for imports is expected to propel Pakistani soybean imports to 1 mmt in the MY 2023/24, reflecting a 303% YoY increase from the previous season. Furthermore, with reduced soybean prices in Mar-24 contracts owing to abundant harvests in key exporting countries such as the US and Brazil, Pakistan stands poised to augment its procurement efforts in securing soybean supplies in MY 2023/24.

On November 24, 2023, approval by the Federal Cabinet of Pakistan for importing genetically-engineered (GE) commodities designated for food, feed, and processing (FFP), marks a positive turn for the country's soybean imports. After more than one year hiatus stemming from regulatory restrictions, this announcement paves the way for the resumption of soybean imports into Pakistan. However, the Ministry of Climate Change (MOCC) has yet to clarify guidelines for implementing the import licensing system, which might potentially be finalized by the first quarter of 2024. This development marks progress in providing clarity regarding the process for importing soybeans into Pakistan.

Effects of Pakistani Soybean Imports Ban

Historically, Pakistan heavily relied on imported soybeans, averaging 2.32 million metric tons (mmt) over four years, with Brazil and the United States (US) as major suppliers. However, the Federal Cabinet of Pakistan stopped allowing soybean imports in Oct-22 unless the importers obtained an import license from the MOCC. Consequently, only around 200,000 metric tons (mt) of soybeans entered the country during the initial two months of the MY 2022/23.

Figure 1. Top countries of Pakistani soybean imports

Pakistan has struggled with insufficient domestic soybean production to replace over 2 mmt of soybeans annually imported. Almost all Pakistani soybean imports are used for processing soymeal for poultry feed. This import restriction severely impacted the processing of soybeans in Pakistan, leading to a shortage of soymeal used for poultry feed. As a result, the scarcity of poultry feed caused an increase in prices for poultry meat and eggs in H1-23.

The Prospects of Resuming Soybean Imports

The decline in Pakistani soybean imports by 86% year-on-year (YoY) to 248,000 mt in the MY 2022/23 reflects the repercussions of the import ban. However, the recent approval allowing the import of GE commodities for FFP brings a positive outlook for the soybean industry in Pakistan. According to the United States Department of Agriculture (USDA), soybean imports into Pakistan are expected to surge to 1 mmt in the MY 2023/24, a 303% YoY increase from the previous season.

Figure 2. Pakistani soybean imports

Considering the recent drop in soybean prices for the Mar-24 contract to USD 13.1 per bushel in W51, decreased by 2% week-on-week (WoW) due to improved supply prospects following rain forecasts in key soybean-producing regions of Brazil. Pakistan now has an opportunity to bolster its purchasing activities for securing soybean supplies. Tridge anticipates a notable surge in Pakistani soybean imports for the year 2024 driven by the favorable price of soybean imports and the expectation of eased import procedures and clearer guidelines from the Ministry of Climate Change (MOCC) in Q1-24. At present, Pakistani soybean importers eagerly await these pivotal clarifications from the MOCC, recognizing their critical role in fostering seamless and efficient trading activities.