India emerged as the world’s largest beef exporter in 2014, ironically the first year of the BJP-led government. But it is set to lose that status this year, thanks mainly to the turbulence in global currency markets, which has eroded the price competitiveness of Indian buffalo meat vis-à-vis beef from Brazil, Paraguay, Uruguay, etc. HARISH DAMODARAN explains.
Is it true that India is today the world’s biggest beef exporter?
Yes. In 2014, India dislodged Brazil from the No. 1 slot, according to the US Department of Agriculture. Between 2009 and 2014, India’s beef exports more than trebled from around 0.6 million tonnes to over 2 million tonnes in carcass weight equivalent terms. In value terms, shipments more than quadrupled from $ 1,163.54 in 2009-10 (April-March) to $ 4,781.18 million in 2014-15. In the process, beef also become India’s No. 1 agri-export item, ahead of basmati rice ($ 4,518.25 million). During his Lok Sabha election campaign, Narendra Modi had attacked the UPA for promoting a “pink revolution” — the beef export boom that took off under UPA rule peaked in the first year of Modi’s government. It must be clarified, however, that India does not officially export cow meat. The beef that it exports is only buffalo meat, also called “carabeef”.
What drove this boom?
Well, three things. The first was global prices. Between 2009 and 2014, the Food and Agriculture Organisation’s average bovine meat price index rose by 71 per cent. The second was growing Chinese demand. Official beef and veal imports by the dragon soared from a mere 29,000 tonnes in 2011 to 417,000 tonnes in 2014 that, in turn, pushed up world prices.
The third factor was specific to buffalo meat and India. Being tougher and hence considered inferior to cow meat, carabeef goes largely towards industrial use — i.e., making sausages, burgers and other processed foods — rather than direct household consumption. For that reason, it fetches a discount to regular beef in the world market. Thus, the average free-on-board price of buffalo meat exported from India in 2014-15 was $ 3,240 per tonne, whereas the corresponding unit value for chilled and frozen beef cuts from Brazil was $ 4,515. Lower prices, along with the proximity to key consuming markets in Southeast Asia and West Asia, imparted a huge competitive edge to Indian buffalo meat exports.
Which are the main destinations for Indian bovine meat?
The biggest market, at $ 2,152.86 million last year, was Vietnam, followed by Malaysia ($ 422.94 million), Egypt ($ 422.34 million), Thailand ($ 393.40 million) and Saudi Arabia ($ 259.01 million). But the bulk of consignments to Vietnam are said to make their way eventually to China. China technically does not import any buffalo meat from India. However, a grey market has developed in recent times, with Chinese traders reportedly using Vietnam’s Haiphong port to bring in Indian meat loaded on small vessels.
Will the bovine meat export boom be sustainable?
Politically, it is difficult to say. India being the world’s top beef exporter is not something Hindu far-right groups, including those backing this government, would be proud of, even though the meat is not of the cow or its progeny.
But the more immediate challenge is economic and commercial. In the last one year, the Brazilian real has fallen by almost 34 per cent against the US dollar. There have been similarly sharp depreciations of the Uruguayan peso and Paraguayan guaraní (17-18 per cent), and the Australian and New Zealand dollars (20-22 per cent). On the other hand, the rupee has shed a mere 4.8 per cent against the US dollar.
The currency turbulence — and the rupee’s relative strength — has eroded the price competitiveness of Indian beef. As cow beef from Brazil, Uruguay, Paraguay or Argentina has got cheaper in dollar terms, there is not much advantage in buying buffalo meat today. This is already borne out by official data. India’s bovine meat exports in April-June, at $ 853.90 million, were 11.1 per cent lower than the $ 960.44 million for the same quarter last year.
The other cause of concern for exporters is China. Chinese authorities have apparently cracked down on indirect shipments from Vietnam, while not taking steps yet to open the country’s doors to direct imports. Last August, Commerce and Industry Minister Nirmala Sitharaman told Rajya Sabha that Indian bovine meat has been denied entry into the Chinese market on grounds of alleged foot-and-mouth disease in animals here. Bilateral negotiations to break the logjam are currently on.
Either way, it looks that Brazil would regain the top slot this year, which it had ceded to India in 2014. And the Sangh Parivar may not mind that at all!