Indian Meat Industry

Biz@India

September-October 2016

India exports around USD 5 billion of meat every year

In a country that is mainly vegetarian, meat production in India is estimated at 6.3 million tonnes, fifth largest in the world. As India is home to the largest cattle population in the world, the opportunities for development of the sector are large but challenges hamper its growth.

It’s late in the afternoon and the traffic in the Indian capital is at its peak. Walking through the lanes of the popular Bhogal market in South Delhi, Vineet enters ‘Republic of Chicken’, an air-conditioned, rather modern, meat shop. Inside, a variety of meats are presented in fancy packages, trying to catch the eye of the customer. “We don’t cook meat at home usually. I am a non-vegetarian, my wife is a vegetarian and our children eat meat as well. Since the shop opened, I like to come here to buy chicken for the kids, mainly because you get packaged food. The shop is clean, it’s more hygienic and very easy to cook !” explains Vineet.

The shop is a franchisee, managed by Naginder Singh, a Punjabi businessman living in Jangpura (South Delhi). “I used to order chicken for our family from ‘Republic of Chicken’. The main USP being that the meat is frozen and kept for many months before consumption. Looking at this as a trend, I decided to start a business,” explains the owner. Republic of Chicken is amongst India’s leading broiler integrators involved in the breeding, hatching, processing, marketing and distribution of poultry products across north and east India.

“From the day we started this business, two years ago, we make between INR 20-30,000 (EUR 250-400) income per week and we can see that people like the concept of having frozen meat. The area where we are located, had only two meat shops but we see more and competitors like ‘Green Chick’, ‘Sardar, a pure meat shop’, opening up,” he adds.

Located almost cheek by jowl and in sharp contrast to Republic of Chicken’s modern looks are a few small, traditional meat shops which sell fresh meat, cut and sold the same day. “It’s true air-conditioned and good looking shop are spreading but it is still considered as luxury by many. Overall, I think that people still prefer to buy freshly cut chicken or other meat products. The taste is definitely different and it is cheaper,” says Aahar, the owner of a small fresh meat shop in Bhogal market.

Singh agrees with Aahar. For him even if the opportunities are there, the Indian meat industry and especially the ‘frozen’ meat businesses are still taking baby steps in the market. “Our main job is to educate the people about the advantage of having frozen meat. Our chicken can be conserved for 360 days. But more than that, the business is really affected by culture and traditions. During October- November for example, we always face huge losses because of the Hindu festivals. No one buys meat during this time and our income drop down to sometimes less than INR 8,000 (EUR 110) per week.”

Indeed, the Indian meat industry is mostly based on fresh meat which is produced and sold daily while the export oriented plants produce fresh and frozen meat. The processing of meat for value added products is insignificant which is less than 10 pc, that too is limited to poultry, according to the Agricultural and Processed Food Products Export Development Authority (APEDA).

Chicken is the meat that is the most consumed in India but India’s principal production is buffalo meat. It contributes to about 31 pc of total meat production. Other meats include sheep, goats, pigs and poultry that represent 5 pc, 10 pc, 10 pc and 11 pc, respectively. The share of bovine meat is about 62 pc as against the small ruminants of 15 pc. The share of red meat is 77 pc.

Leading the world’s meat exports

If the domestic market is slow to develop in terms of processed meats, the industry’s exports have been booming. India exports around USD 5 billion of meat every year and in 2014, India dethroned Brazil as world’s leading exporter for bovine meat, with its buffalo meat, according to the US Department of Agriculture (USDA).

Production and export of meat from India commenced in 1969 and the export volumes as well as the number of markets have grown continuously in the last 47 years. Currently, Indian meat exports reach 64 countries. Though India is strategically located, as many of its export markets are in the neighbourhood, Indian meat has several advantages over the meats produced and sold by other nations.

There is no practice of using hormones, antibiotics or any other chemicals. The Indian buffalo meat is also 93 pc lean and blends very well with other ingredients for value added products.The animals are also slaughtered strictly according to ‘Halal’ method, making it very popular in Muslim nations in Asia and in the Middle East.

According to the USDA, in 2015, India strengthened its leading position with a projected total of 2.4 million tonnes bovine meat exported, compared to exports of 2 million tonnes each by Brazil and Australia. 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. An 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 in the total world cattle meat exports to a record level of 10.2 million tonnes this year.

Challenges ahead

Even if the opportunities to develop the market further are clearly there for the Indian meat producers, the sector has not received adequate attention by the entrepreneurs, policy makers, scientists and politicians, although it is closely linked to the economic condition of poor farmers and backward communities.

On the domestic market, eating, selling or working in the meat industry is still a taboo. Those who cut and sell meat are identified under a specific caste for example. On another front, there are plenty of pressure groups advocating for banning production and consumption of meats in the country and some groups calling for a total prohibition on meat, especially beef from cows, which are considered sacred by Hindus. Some Indian states notably Maharashtra and Haryana have already banned production and possession of cow meat and there have been some incidents involving vigilante groups attacking and injuring those suspected of being involved in beef production or trade.

Not surprisingly, due to the taboos associated with meat, India’s other animal products industry, milk, has been booming. India has for long been the world’s leading milk producer, with 117 million tonnes a year, accouting for 13 pc of the global production. In meat, the country still stands only fifth in the rankings.

This is mainly due to the fact that investments in the meat industry remain very low, compared to other industries. Infrastructure, modern technologies and skill development remain key to boost the industry. Another major constraint in achieving the goal lies in ensuring hygenic conditions in even the smallest of the traditional slaughter houses for production of safe meat.

Some doors close, others open

Two large producers and consumers of meat in the world, the Europe Union and the United States, which are also two large export markets for India, have been setting up protective barriers, in an attempt to save their own meat producers. It will, therefore, take time for India to enter these mature and very competitive markets.

But in the past few years, two new markets have opened to Indian meat exports: 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 the industry potential, it is also required to expand geographical footprint in different Indian states. “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,” adds Boyal.

One of the possible diversification for the meat market to look at is the organic meats. It is an almost non-existent segment in India but has a huge potential of growth. It is more important for exports as consumers in many developed nations are firmly moving towards organic foods, including meats and consumers are increasingly aware and seek more information about what they consume, so that they can trace the food they eat, through the whole chain.