Soybean processing in India, a location study of an industry to come

Soybeans containing about 20 percent oil and 40 percent high-quality protein can be grown in India and may help to alleviate this shortage. The key issue in implementing a soy economy in India is to develop an efficient system of marketing and processing channels for soybeans. In establishing a processing industry, the necessary plants should be optimally located in relation to the areas of soybean production, both during the period of expanding production and after production stabilizes. The size of each plant should be optimal for each stage. A mathematical model simulating a future soybean processing and marketing industry for India is an effective tool to provide these guidelines. The objective of this study, therefore, is to determine optimal size and location of soybean processing plants in India in line with an assumed expansion of soybean production. The major factors affecting the marketing-processing system for soybeans are: (1) the location of production, as determined by natural requirements and comparative advantages of growing soybeans in different regions of India, (2) the demand for products in which soy oil and soy meal might substitute for traditional ingredients (replacing groundnut oil for vanaspati production and gram flour, for example), (3) the costs of processing soybeans in India, and (4) the comparative costs of shipping soybeans, soy oil, and soy meal by different means of transportation. The available information on these factors -- though incomplete on some points -- is sufficient to serve as the base for a spatial equilibrium model. The quadratic programming portion of the model reproduces the interregional trade in soybeans and in the joint final products, soy meal and soy oil, among seven regions. The plant location portion of the model at the same time simulates for each region the assembly and processing of soybeans and the distribution of soy meal.