Corporates turn to Latin America for oilseeds farming

The Hindu Business Line | 24 September 2008

STC leads consortium for contract cultivation.

On the greener side
  • Consortium is likely to avail 10,000 hectares in Paraguay or Uruguay.
  • Plan involves an outlay of Rs 200 cr.
  • STC has the first right of refusal regarding the produce.

M.R. Subramani

Chennai, Sept. 23 -- Driven by food security concerns, about 15 companies, led by the State Trading Corporation (STC), have formed a consortium to engage in corporate farming either in Paraguay or Uruguay. Among other notable firms that have joined the consortium are Gujarat Ambuja, Ruchi Soya Industries and Jhunjhunwala Vanaspati Ltd.

“The Centre is very keen on food security. If we can go out and grow oilseeds, the pressure on food crops within the country will be eased. The consortium is likely to avail 10,000 hectares in Paraguay or Uruguay for contract farming,” said Mr B.V. Mehta, Executive Director of Solvent Extractors’ Association of India (SEAI). The Association is the moving force behind the initiative to look at Latin American countries for corporate farming of oilseeds.

Sanwaria Agro Oils Ltd is the latest showing interest in joining the venture. The company on Tuesday told the Bombay Stock Exchange that its board of directors had approved enrolment in the consortium.


A team of SEAI had visited the Latin American nations in July 2007 before an agronomist and a financial consultant were sent in December to those countries to prepare a techno-feasibility report. The report was ready in February and presented to Exim Bank.

“The bank is keen to finance our venture. But since the current policies of the Government do not allow such funding, there is some hitch. We have taken up the issue with the Union Government and it has shown interest in our project,” said Mr Mehta.

The Union Consumer Affairs Secretary, Mr Yashwant Bhave, and an official of the External Affairs Ministry held talks with the association. Following this, the Centre has asked Exim Bank to extend necessary help for the venture. It was during the talks that STC was asked to take the lead by the Centre.

“We are waiting to hear from the bank to take the issue forward,” he said.

The plan to go in for corporate farming involves an outlay of Rs 200 crore of which Rs 50 crore will come from the stake holders.

“We plan to grow soyabean, sunflower and maize. We are yet to decide whether we should bring the produce grown there to our country for extraction. STC has been given the first right of refusal to decide on the produce that is grown,” Mr Mehta said.

This means, STC can decide on selling the oilseeds in the market or ship it to India for extracting oil.

“Primarily, the laws in the Latin American nations are friend for farming. We can engage people of our choice and there are no curbs on expatriation. On top of this, the weather is conducive and the soil is good,” he said.

With productivity being three times than the yield in India, the consortium stands to gain a lot.

“For example, soyabean yield here is 900 kg a hectare, whereas in those countries it is 3,000 kg,” Mr Mehta added.

Who's involved?

Who's involved?

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