A recent report by the Foreign Agricultural Service (FAS) of USDA states that for the second year in a row in 2013 India will be the world’s largest beef exporter has drawn attention to the meat trade industry. Total global meat trade is projected at 27.0 million metric tons (MMT) in 2013, up 2.4 percent from 2012, with beef at 9.0MMT, 33.2 percent of total trade, pork at 7.3 MMT, 27.2 percent, and young chicken and turkey meat at 10.7 MMT, 39.6 percent. Global beef exports in 2013 are expected to be up 7.6 percent over 2012, pork up 1.4 percent and chicken and poultry meat up 1.6 percent.
India’s beef export prominence has been recent with exports of only 672,000 MT in 2008, 607,000 MT in 2009 and 917,000 MT in 2010. Much of India’s beef is from buffalo and increased demand for milk has led to a larger beef supply. According to the U.S. Agricultural Attaché in India, domestic per capita consumption of buffalo beef is only about 4.4 pounds year and about 2.0 MMT total. Federal and state laws prohibit the slaughter of cattle for religious reasons, but slaughter is allowed for buffalo bulls and unproductive heifers.
The dairy industry’s growth is led by strong consumer demand for milk protein, producers’ interest in expanding production and government programs to increase the efficiency of milk production. The Ministry of Agriculture works with other agencies to set standards and issue sanitary permits for production and processing, provides assistance to farmer cooperatives and manages the Intensive Dairy Development Program to increase milk production by 6 MMT per year over the next 15 years. Production for 2012 increased about 6 MMT over 2011 and will likely be up more than 6 MMT for 2013.
The government of India also has programs to expand production of male buffalo calves. Under the 11th five year plan (2007-2012) the goal was to increase beef meat output by 10 percent per year. The Agricultural Attaché estimated growth of beef production at 12 percent in 2012 and projects 14 percent growth in 2013. A buffalo fattening industry is developing, but yields remain low. Export-oriented processing facilities have developed to serve the industry. Programs are likely to be continued in a 12th five year plan (2012-17).
Whatever the yearly increase in beef production in India, almost all of the increase will enter the export market. Domestic consumption has been growing 1-2 percent per year and that is not expected to change in the years immediately ahead. According to the Agricultural Attaché, vegetarian and dairy-based protein sources are preferred. Among non-vegetarians, poultry, fish and mutton are the preferred meats, with poultry most likely to grow in demand as incomes increase. Poultry meat is also the most common meat in U.S.-style quick serve restaurants. According to estimates by FAS, Indian beef exports grew by 41 percent in 2011 to 1.3 MMT on a carcass weight basis; 13.0 percent in 2012 to 1.7 MMT; and projected at 28.6 percent in 2013 to 2.2 MMT.
Compared to India most other major beef exporting countries can be considered mature export industries. For Brazil, the second largest exporter just barely ahead of Australia, beef exports in 2011 decreased by 14.0 percent from 2010 to 1.34 MMT. Slow growth in 2012 and 2013 are expected to put exports at 1.45 MMT in 2013. Australian beef exports have been flat at 1.4 MMT per year for the last five years and are expected to be 1.4 MMT again in 2013. U.S. beef exports in 2013 are projected to be 1.1 MMT, unchanged from 2012 and down from 1.3 MMT in 2011. Global beef exports are projected to be up 0.63 MMT in 2013, and India will account for 0.48 MMT of that increase.
Indian beef shipments go to overlapping markets with those served by other beef exporters. According to the U.S. Agricultural Attaché, in 2011 Vietnam was the largest buyer at 255,000 MT, 27.5 percent of total Indian exports. Malaysia was second at 97,000 MT,10.5 percent, Egypt third at 68,000 MT, 7.4 percent, Saudi Arabia fourth at 63,000 MT, 6.8 percent, and Jordan fifth at 62,000 MT, 6.7 percent. Fifty countries were listed as having purchased some product in 2011. Among the top 11 beef importing countries listed by FAS, Malaysia, Egypt and Saudi Arabia were major markets for India. Other buyers included Canada at 1445 MT and the U.S. at 2 MT.
Indian buffalo beef competes on a price basis because of low costs of production as an off-shoot of the expanding dairy industry. It is considered a lean meat good for blending and is produced according to halal standard. The World Organization for Animal Health (OIE) considers India in the ‘negligible risk’ classification for BSE and ‘free’ of rinderpest. Indian exporters have voluntary vaccination programs to combat foot and mouth disease (FMD), and the government has launched a U.S. $800 million program against FMD. While these programs are positive steps, FMD remains a significant hurdle for expanding market access.
With a growing middle class and a population growth rate of 1.3 percent per year India has a growing demand for protein. For vegetarians that is met by pulses and oilseed crops. For non-vegetarians that includes poultry where production is growing about 10 percent a year. Per capita poultry meat consumption is now estimated at about 6.6 pounds per year. Per capita chicken egg consumption is 51 per year. India produces 17 percent of the annual global milk output, 129 MMT of fluid milk, about 240 pounds of fluid milk per person. This is increasingly being processed into a wider variety of products.
Per capita consumption of protein is still low compared to most developed countries and many developing ones. Buffalo beef has found a growing market in exports to other markets. That growth could continue as traditional Indian diets and religious practices limit demand for the new protein source. If those practices were to change, there would be a ready market at home for the protein.
The 1.3 billion people of India continue to have an impact on agricultural and non-agricultural markets around the world as exporters and importers. A rising demand for protein has been a normal part of a growing middle class. How that occurs in India is sure to affect markets in the rest of the world for protein sources like beef.
Ross Korves is an Economic Policy Analyst for Truth About Trade & Technology