India fails to capitalise on Brazil’s beef export problems
A temporary widespread embargo on imports of beef from Brazil, the world’s largest exporter, should have been a boon for India, the second largest, but internal restrictions on the slaughter of certain types of cattle have resulted in a flat performance in India’s export numbers in the financial year that ended on March 31, 2018.
Several countries – including the United States, the nations of the European Union, and China, Brazil’s top beef destinations – temporarily banned Brazilian meat after prosecutors said health inspectors there had been taking bribes to approve sub-standard meat. Other importing nations, including Saudi Arabia and the UAE followed suit.
The scandal that erupted on March 17 hit Brazil’s meat industry hard, causing beef exports to fall in the range of 11 percent to 18 percent in the three months immediately following the crackdown, according to data compiled by the Brazilian Beef Exporters Association (ABIEC).
However, Indian exporters could not capitalise on the Brazilian vacuum because of “local problems”, Dr. Surendra Kumar Ranjhan, director of New Delhi-based Mirha Exports Pvt. Ltd, told Salaam Gateway.
“We couldn’t take advantage of this situation,” said Ranjhan, estimating that India’s beef exports for the full financial year 2017-18 would be the same as the previous year, at about $3.75 billion.
India exports mainly water buffalo meat, which is traded as carabeef in the international market. It exported 1.32 million tonnes of carabeef worth $3.91 billion in the financial year from April 2016 to March 2017, according to data from India’s Agricultural and Processed Food Products Export Development Authority (APEDA).
Data for the 2017-18 financial year, available till November 2017, show that India’s exports fell marginally to 917,977 metric tonnes from 919,419 metric tonnes recorded during the same period in the previous year.
Brazil, on the other hand, has managed to conclude the 2017 financial year on a positive note. It exported 1.53 million tonnes of beef worth $6.2 billion in 2017, an increase of 10 percent in volume and 14 percent in value compared to the previous year, according to ABIEC, indicating that the industry was able to outweigh any lingering concerns from the rotten meat scandal.
Sirajuddin Qureshi, managing director of meat processor and exporter Hind Agro Industries Ltd., acknowledged that India’s export turnover “has not been very encouraging for this year” but he insisted that things had improved in the first few months of 2018.
“We might end the financial year with a marginal rise of up to 5 percent in beef exports,” said Qureshi, whose company has beef production capacity of 400 tonnes and annual revenues of more than $54.5 million.
“[India’s problems] started when various state governments in Maharashtra, Haryana and elsewhere began to restrict or prohibit the slaughter of cow, bull, bullock and their progeny. Many slaughterhouses and exporters were negatively affected,” said Mirha Exports' Ranjhan.
This came alongside the crackdown on several illegal beef-selling shops and slaughterhouses in states like Uttar Pradesh, which has the largest number of beef processing plants in India.
However, Qureshi, who is also the president of the All India Jamiatul Quresh, an umbrella body of beef traders and exporters, said things were improving, but slowly. “Government agencies are checking all the norms and gradually issuing new licences to shopkeepers in Uttar Pradesh,” said Qureshi.
In May 2017, the Indian government issued a notification banning the trade of cow, buffalo and other bovines for slaughter at animal markets. The notification was withdrawn following a stay order issued by the country’s Supreme Court.
The government is expected to issue a revised version of the notification later this year.
“Since the government has withdrawn the notification, we are not facing any procurement issues, but the cost of raw material in the local markets has gone up significantly. This is because people are scared to do slaughtering,” said Ranjhan, whose company has an annual turnover of $195 million, with a yearly export of 65,000 tonnes.
Amidst this challenging environment, he said, many small- and medium-sized beef processing companies were finding it difficult to run their plants, and had begun to give them on lease or rent to larger exporters. “There are very few small exporters left in the country,” Ranjhan said.
Mohammed Imran, managing director of buffalo meat processor and exporter India Frozen Foods, said the volume of his company’s beef exports had fallen by 20 percent to 25 percent not only due to supply issues but also a reduced demand in export markets. His company has an annual turnover of $30 million.
The Uttar Pradesh-based company used to export between 80 and 90 containers of 28 tonnes each every month to clients based mainly in Vietnam, Egypt, Lebanon, Qatar, Iraq and Bahrain.
“But, now we are not even making 50 containers a month because there is not much requirement. Plus you have many exporters vying for the same market. I think more new markets such as Russia should open up for us to sustain business,” Imran said.
The opening of Indonesia’s market to Indian carabeef exports in July 2016 has had a positive effect.
“Our export to Indonesia is growing significantly every year. At the moment, only 10 plants in India are approved by them to export beef into their country, but an Indonesian delegation recently visited India to inspect 31 new plants,” said Ranjhan.
Carabeef exports to Indonesia recorded a sharp increase from 812 tonnes in 2015-16 to 65,304 tonnes in 2016-17, according to APEDA data.
Southeast Asia’s biggest economy looks likely to continue importing beef from India after its national state food procurement agency said last month that it had obtained a permit to import 100,000 tonnes of water buffalo meat in 2018.