Indian Meat Exports

Biz@India

October 2015

India is world’s largest bovine meat exporter, thanks to its buffalo meat that is especially popular in Asia and in the Middle East in its halal version. With big markets such as the USA and EU being guarded with protective barriers, China and Russia are the next big targets.

While some Indian pressure groups may advocate for a nationwide beef ban but India has a USD 5 billion annual meat export industry that has been growing steadily in the last decades. Last year India even dethroned Brazil as world number one exporter for bovine meat, with its buffalo meat, according to the US Department of Agriculture (USDA).

In 2015, India is strengthening its position with a projected total of 2.4 million tonnes bovine meat exported, compared to 2 million tonnes from Brazil and Australia being the next, forecasts the USDA. And the world beef market is still painted in a rosy picture, as more and more people eat beef in emerging zones such as Asia and Africa. Increase in the purchasing power and changing taste buds in these growing economies are a few of the growth drivers. The USDA anticipates a rise of total world beef exports to 10.2 million tonnes this year, a record.

So Basmati rice is no longer the number one item for food agricultural export from India, in terms of value, according to the Agricultural and Processed Food Products Export Development Authority (APEDA), the Indian agri-export promotion body established by the government. Bovine meat is the new leading product in this category and weighs 23 pc of world beef exports. It is actually buffalo meat, which accounts also for about four fifth of the total meat exports from India. The rest of the meat exports are sheep and goat (one fifth) and poultry and pork, each category doing fine in terms of export progression.

India accounts for more than a half of the world buffalo population and has a competitive advantage: it is cheaper – the animals sent to the abattoir are older, the female population in particular first produces milk. The Indian bovine meat is then used mainly for food transformation by the food industry in processed meat products, which incorporated meat as an ingredient.

This price advantage of Indian bovine meat could be partly challenged this year though as the Indian rupee is fairly strong so far on average, in US dollar terms, compared to other currencies of competitors such as the Real, the currency of Brazil.

“Brazilian Real is very low and the dollar is up so it makes competition harder,” says Priya Sud, a partner at Al-Noor Export, a Delhi based company engaged in the export of Halal frozen buffalo meat to the Middle East, Commonwealth of Independent States (CIS), South East Asian and African countries.

But reservoirs of growth are definitely there. Firstly, there are opportunities in terms of product categories. Frozen products are particularly picking up, in both raw and processed meat. Then, geographically, the reach of India is also expanding in the world meat market.

The key clients for Indian beef are from Asia and the Middle East (80 pc of the total) followed by Africa (15 pc). In Asia, Vietnam is the number one market (45 pc) but it is also considered as a transit destination for meat that eventually enters China. This giant market, in terms of consumption, has an ever-growing appetite but no meat import agreement with India yet. Then, in Asia come countries like Malaysia and Thailand.

The Middle East, with Saudi Arabia at the forefront, has been a historical market for India since the 1960s, for specific types of meat. These meats comply with Islamic law requirements in the way the animals are slaughtered, as defined in the Islamic religious text Koran. Animals are killed through a cut to the jugular vein, carotid artery and windpipe. They must be alive and in good health when they are killed and all their blood should be drained from their carcass.

China and Russia, the big targets

Europe and the United States, two chief markets in terms of meat, have been setting up protective barriers. It will, therefore, take time to enter these mature and very competitive markets, in the context of tough tariffs negotiations for India at the World Trade Organization (WTO). Also, a much awaited and delayed Free Trade Agreement (FTA) between India and the European Union stands on the way for breakthrough in the European market.

But there is still room for new markets. Two other big clients are the next targets: China and Russia. They represent immense potential for Indian exporters, in an evolving political context for both of them.

“China and Russia are two major countries with a good potential of growth in terms of meat export from India. We signed a Memorandum of Understanding (MoU) with China in 2013 and are working on an agreement to export there. We have good prospects. Although we just started in Russia, it offers a good potential as Russia aims on diversifying its meat imports, from Central and Western Europe to other countries like India, since some European products were banned in Russia, after the Ukraine crisis,” says R K Boyal, in charge of meat export at APEDA.

To develop exports, the next step is also to increase meat production in India, where consumption is also growing. It is because the diet gets richer in terms of proteins for non vegetarians in the middle and the upper class. But all categories do not experience the same upward trend. Beef consumption has been decreasing by more than 40 pc since the year 2000 in India. The decrease is still going on with the deterrents such as beef ban in states like Maharashtra. But chicken consumption, more importantly in volume, is picking up and increased by more than 30 pc since 2000, according to United Nations Food and Agricultural Organization (FAO) data.

To develop the industry potential, it is also required to expand geographical footprint in different Indian states. For the moment, when people think about beef in India, one main state comes to mind: Uttar Pradesh. It exports more than half of the total in the meat sector in India and has big areas specialised in the meat industry (slaughter houses, packaging facilities etc.) in cities like Meerut or Muzaffarnagar, in the western UP. However, other regions of the country offer potential in smaller production categories such as pork.

“Geographically, the biggest hubs for meat industry and export are Uttar Pradesh followed by Punjab and Maharashtra. But there are plans also to develop more such industries in the North East, which has good potential and facilities, notably in piggery farms,” explains R K Boyal, from APEDA.

One of the next end of the market to look at is the organic or green label segment of the meat market. It is yet almost non-existent in India but has a huge potential of growth.

“India has a very good quality meat, very natural, and some of it could be labelled ‘green’ or ‘organic’, with a good ability to trace the product. It is possible to develop in the future this awareness about what is organic and label it in conjunction with government authorities,” says Priya Sud, partner at Al-Noor Exports.

Clients around the world are pushing for quality labels, concerned by health issues for humans regarding the consumption of animals raised in huge industrial farms, like in the Middle West of the USA. From a niche market, the organic and “green” label is developing fast in developed countries, as consumers want to be able to trace down the food they eat, through the whole chain. Even for the processed meat products such as burger patties, sausages, dumplings and meat balls. That is one of the possible ways of diversification for Indian meat exports, targeting also this high end market, to increase its margins.