1 October 2011

11 minute read

Report Highlights:

Given ample buffalo populations and competitive Indian prices, the Indian buffalo meat industry has become one of the largest bovine meat producers in the world, with growth almost uniquely focused on the export market. CY 2012 production of Indian buffalo meat is forecast to rise to a record 3.16 million tons (on a Carcass Weight Equivalent basis), up six per cent up from CY 2011. In the last two years, exports have grown to record levels, making India the third country in the world to export more than 1 million tons of bovine meat annually. CY 2012 buffalo meat exports are forecast at 1.15 million tons, up 12 per cent from 1.02 million tons in CY 2011.

As the world‟s largest dairy consumer, India‟s bovine herd continues to grow to meet domestic dairy demand. According to the National Dairy Development Board (NDDB), consumer demand for milk and milk products is growing at approximately double the growth rate of production. As a result, strong dairy demand continues to fuel herd growth, and has also paved the way for improved management practices. Private and cooperative sector led extension in the dairy field, along with the rise of artificial insemination services are pushing up herd numbers. Thus, herd growth is expected to continue in the short-term, with CY2012 combined stocks forecast more than 4 per cent over 2011 at 325 million heads. CY2011 combined stocks for cattle and buffalo are estimated at 320.80 million heads, and CY2010 stocks have been revised upwards to 316.40 million heads to reflect growth in the bovine herd.

Buffalo meat production has experienced significant increases recently, mainly due to the relative low cost of Indian buffalo meat compared to other international suppliers. Increasing animal inventories have also facilitated lower costs and overall buffalo meat production. As a result, the Indian buffalo meat industry has become one of the largest bovine meat producers in the world, with growth almost uniquely focused on the export market. Although no official statistics are available, CY 2012 production of Indian buffalo meat is forecast to rise to a record 3.16 million tons (on a Carcass Weight Equivalent basis), up six per cent up from CY 2011. CY 2011 buffalo meat production is estimated at 2.98 million tons and CY 2010 production has been revised slightly up to 2.84 million tons.

India‟s cattle and buffalo population is made up of small holdings distributed among millions of farmers and is characterized by a “low-input/low-output model,” which emphasizes low-cost or no-cost feed rations. However, in order to increase dairying productivity, the Government of India (GOI) is promoting various programs and technologies, including artificial insemination. As a result, industry and government sources have indicated that the Indian herd will level off and decline in the long-term, as more productive technologies are introduced and more efficient producers enter the market. Similarly, industry sources indicate that buffalo meat production will likely peak within the next two to three years, as Indian buffalo meat prices achieve parity with competing producers.

According to India‟s most recent Livestock Census (2007), buffalo make up approximately one third of India‟s total bovine population. Buffalo are preferred for their high milk fat content and their adaptability to Indian agricultural conditions. Indian dairy farmers typically earn a bonus for producing buffalo milk. Additionally, farmers can earn secondary income from selling buffalo calves for slaughter, and the buffalo meat industry sources report healthy, growing populations in the regions surrounding buffalo slaughter facilities due to this incentive. Conversely, cattle are preferred by milk producers for their consistent supply and potential for improved yields through imported genetics and management practices. Given the positive benefits of both species, it is likely that the ratio of animals will remain similar in the short term. In the long term, however, many industry sources believe that increased milk production from cattle will lead to a smaller buffalo population.

Feeding practices in the Indian cattle sector reflect the “low-input/low-output model,” resulting in feed rations that are based on locally available agricultural bi-products including wheat and rice straw, sugar cane tops, and oil cakes. Commercially prepared feed, feed grains and silage, while available, is not used extensively. According to feed industry representatives, the cattle sector presently constitutes a small portion of their total business. The Indian government, recognizing the importance of feed availability, announced the Accelerated Fodder Development Program (AFDP) announced in Indian Financial Year 2011-12 (April-March).

Indian law prohibits the slaughter of productive (in milk) bovines. Indian federal and state laws also prohibit the slaughter of cattle (male and female) for religious concerns. Buffalo slaughter is allowed, however this is restricted to male buffaloes and unproductive female buffaloes. Of late, an increasing number of slaughter facilities in buffalo populated regions have encouraged some farmers to salvage and sell male buffalo calves which were previously unused. Given this incentive, meat production is increasing, in part, through the salvage of animals which previously went unused.

According to the Ministry of Food Processing Industries, the state of Uttar Pradesh in India is the largest producer and exporter of buffalo meat, accounting for roughly 70 per cent of the production. South India produces around 17 per cent of the total buffalo meat with the state of Andhra Pradesh accounting for the largest share.

Production Policy

The Government of India initiated a major program with a focus on genetic improvement entitled “National Project on Cattle and Buffalo Breeding (NPCBB)” in October 2000 for a period of 10 years. Given the success of this project, the GOI has decided to continue this program through the 11th Five Year Plan period (2007 -2012). Government sources indicate that the project is helping to increase both the number of crossbred animals as well as to increase the number of in-milk animals over the last decade.

A major pillar of the GOI‟s livestock development strategy has been the subsidized public delivery of veterinary services. To improve the quality of veterinary services, the Department of Animal Husbandry, Dairying and Fisheries (DAHD), Ministry of Agriculture, GOI, is implementing the 2009 “Livestock Health and Disease Control” program on a nation-wide basis, which aims to improve the diagnosis of a series of common diseases. The various components of the program are: (a) Assistance to States for Control of Animal Diseases; (b) National Project on Rinderpest Eradication; (c) Professional Efficiency Development; and (d) Foot & Mouth Disease Control Program. In order to effectively tackle the issue of livestock health, the scheme was expanded in August 2010 by including four new components and enlarging the scope of the Foot and Mouth Disease Control Program. These new components are: (a) The National Control Program of Peste des Petits Ruminants; (b)The National Animal Disease Reporting System; (c) Establishment and strengthening of existing veterinary hospitals/dispensaries; and (d) National Control Program of Brucellosis.

Based on the assessments and recommendations made by the GOI Standing Committee of Parliament and the Planning Commission, DAHD launched two major schemes under the 11th five year plan. These schemes are The Salvaging and Rearing of Male Buffalo Calves Scheme and The Utilization of Fallen Animals Scheme. The schemes are funded by the National Bank for Agricultural and Rural Development (NABARD) and are being launched in a bid to achieve a growth rate of 10 per cent for the meat sector in the 11th Five-Year Plan period. The Salvaging and Rearing of Male Buffalo Calves scheme promotes the rearing of male buffalo calves for meat production and to develop linkages with export oriented slaughterhouses. The states of Andhra Pradesh, Bihar, Chattisgarh, Jharkhand, Kerala, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Uttar Pradesh, Punjab and West Bengal are targeted as priorities. The salvaging scheme is expected to generate a substantial quantity of meat hides and by-products and also provide employment in feed, fodder, meat, leather and various input services. The Utilization of Fallen Animals scheme proposes to establish carcass utilization centers in animal density matrix areas and is expected to provide employment to the rural poor.

The Government of India has launched the National Mission for Protein Supplements in the 2011-12 Indian financial year, with an allocation of more than $65 million. This mission will take up activities to promote animal based protein production through livestock development, dairy farming, pig farming, goat rearing and fisheries in selected blocks of the country.

Indian consumption of buffalo meat averages approximately two kilograms per person per year. CY 2012 buffalo meat consumption in India is forecasted around 2 million tons (on a Carcass Weight Equivalent basis), up by 2.5 per cent over CY 2011. CY 2011 buffalo meat consumption is estimated at 1.96 million tons. CY 2010 buffalo meat consumption is revised to 1.92 million tons, reflecting more exports, and increasing preferences for chicken among the meat -eating (non-vegetarian) population.

Local buffalo meat consumption shows only marginal increases, reflecting population growth and the Indian preference for vegetarian and dairy-based protein sources. For non-vegetarian Indians, poultry meat, fish, and mutton are the most preferred meats. As incomes grow, meat consumption increases are likely to be experienced primarily through increased poultry meat consumption. However, as mentioned earlier, this increase will be overshadowed by the general preference for dairy and pulses. The rise of quick service restaurants in India is also a driver of non-vegetarian consumption. However, quick service restaurants primarily focus on poultry products. Despite an increase in overall consumption, per capita consumption may not change factoring in increasing human population.

Processing

The processed meat sector, formerly regulated by the Ministry of Food Processing Industries (MOFPI), is now regulated by the Food Safety and Standards Authority of India (FSSAI) through the Food Safety and Standards Rules and Regulation 2011. These regulations were enforced nationwide with effect from August 5, 2011, repealing the Meat and Meat Products Order (MFPO), 1973. The Food Safety and Standards Regulations (FSSR), 2011 contain standards and regulations for meat and meat products. The FSSR 2011 requires registration and licensing of meat processors and other food operators in the meat value chain. It also enforces sanitary maintenance and controls at all stages of meat (including fish and poultry) products production. These standards equally apply to domestic and imported meat and meat products.

There are around 4000 municipal slaughter houses in the country and 30 abattoirs/meat processing plants. These 30 abattoirs/meat processing plants are 100 per cent export oriented units and are registered with the Agricultural and Processed Food Export Development Authority (APEDA). Additionally, 74 meat processing and packaging units are also registered with APEDA. These meat processing and packaging units receive dressed carcasses from approved municipal slaughter houses for the export of meat. According to industry sources, approximately 7 slaughter houses are expected to be added by the end of 2012.

Existing supply chain and value chain: In India processed meat is sold primarily in two forms- frozen and chilled. Frozen meat is mainly meant for export while chilled meat is consumed in the domestic market. Municipal slaughter houses sell meat to the domestic market. Only 100 per cent export-oriented facilities, registered with the APEDA, are eligible to produce and process meat for export purposes. Export oriented processed meat is transported in refrigerated vans/ containers from processing units to port locations and is stored in cold storage near port locations, from where the product is shipped to destination markets.

The Ministry of Food Processing Industries launched the comprehensive financial scheme, modernization of existing abattoirs/establishment of modern abattoirs, under the 11th five year plan (2007-2012). The program is expected to continue in the 12th five year plan period (2012-2017).

MOFPI is also administering another scheme for technology upgrading, establishment and modernization of processing plants. For details see http://www.mofpi.nic.in/images/ar10-11.pdf.

In order to improve abattoir conditions, the National Meat and Poultry Processing Board (http://nmppb.gov.in/), under the ministry of food processing industries (MoFPI), has taken up an initiative to provide consultancy to build around 160 modern abattoirs across the country. The first abattoir to be set up under the initiative has already started working in the Dholpur district of Rajasthan.

Note: The Directorate General of Foreign Trade (DGFT), Ministry of Commerce & Industry, Govt. of India vide notification No. 12/(2004-2009) dated 21/12/2004, requires abattoirs/meat processing plants to register with APEDA prior to export. It has been decided to adopt the following procedure for grant of registration certificate: Procedure for Grant of Registration Certificate to Abattoirs/Meat Processing Plants.

India is a net exporter of buffalo meat (deboned frozen buffalo meat). In the last two years, exports have grown to record levels, making India the third country in the world to export more than 1 million tons of bovine meat annually. Increased exports are primarily the result of the lower cost of Indian buffalo meat (relative to international competitors). Additionally, ample supplies due to herd growth from strong dairy demand and new incentives from slaughter facilities to salvage previously underutilized animals are also driving India‟s low cost of production and fueling exports. As a result, CY 2012 buffalo meat exports are forecast at 1.15 million tons (on a Carcass Weight Equivalent basis), 12 per cent up from 1.02 million tons (on a Carcass Weight Equivalent basis), in CY 2011. CY 2011 buffalo meat export is estimated at record 1.02 million tons, making India only the third country, after Brazil and the US which exports more than 1 million tons of beef (buffalo meat). CY 2010 buffalo meat export is also revised up to a record 917 thousand tons (on a Carcass Weight Equivalent Basis). Import of beef from all sources is restricted and as such imports are set at nil.

As a price-based competitor, India has seen export increases in the previous two years to Middle Eastern, African and Southeast Asian countries. Referring to table 1, (India: Beef Exports), the vast majority of export growth in 2010 was to Middle Eastern and North African Countries (Only 2 of the top 10 growth markets were outside of this region). This was lead by Egypt, Jordan, Saudi Arabia, Algeria, UAE, Iran, Iraq, Kuwait and Syria. Industry sources have stated that a similar trend is expected in 2011.

While Indian buffalo meat competes on a cost basis, there are several other factors which impact trade. Specifically, all Indian buffalo meat is produced according to halal standards. It is also characterized as a lean meat with positive blending characteristics. Industry sources place significant weight on India‟s disease status, which includes OIE „negligible risk‟ classification for Bovine Spongiform Encephalopathy (BSE), and OIE „free‟ recognition for rinderpest and CBP (Contagious Bovine Pleuropneumonia) (Source: OIE). While this disease status has helped open new key markets (such as Algeria in 2010), India‟s Foot and Mouth Disease (FMD) status poses issues for new market access in some countries. (Note that FMD in India is controlled through vaccination programs).

Further Reading

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