Arguably no supplier to the world beef market over the last decade has had as much impact as India has in disrupting traditional trading patterns in beef.
Political and religious infighting in India over the size and very existence of the industry and its conflict with religious Hindu principles came to a head earlier in the year suggesting to some that the existing export bovine juggernaut might be losing its influence.
Despite some setbacks, the latest forecasts from the USDA suggest that cattle (Bos Taurus (British breeds, mainly dairy cattle) or Bos indicus (Indicus breeds including Brahman, Sahiwal and Red Sindhi) and water buffalo (Bubalus bubalis) producing carabeef, together are estimated at 305 million head. In 2018, carabeef and beef production is forecast by USDA to increase by 1.2pc to 4.3 million tonnes after a slower year in 2017.
Industry sources indicate that one local factor which reduced exports, particularly in early 2017, was India’s demonetisation policy where bank notes of 500 and 1000 rupees ceased to be legal tender to crackdown on the black market and corruption. This led to export-oriented slaughter operations not having sufficient funds in cash to make payments to the traders and small farmers for the purchase of animals.
In addition, the government cracked down on illegal slaughter houses and meat shops in Uttar Pradesh, the state which is the largest producer of buffalo meat. Though the crackdown had no direct impact on legal export slaughterhouses, the overall disruption of the live animal supply chain coupled with the impact of demonetisation did affect exports.
By contrast, the closure of illegal meat establishments and resulting social unrest did significantly affect domestic supplies of animals available for slaughter. In turn, Carabeef and beef prices did rise in domestic markets during the last few months though the rise is expected to be short-lived once the supply chain stabilises. Most Indian states restrict or prohibit slaughter of cattle (Bos taurus or Bos indicus) due to religious sensitivities, so India’s meat sector mainly depends on slaughter of culled water buffalo (Bubalus bubalis) from the dairy sector.
USDA says that strong growth prospects in the dairy sector in India will support increases in water buffalo and cattle herd size over the next decade. India’s water buffalo population increased at an annual growth rate of about 1.3pc per year from 1997 to 2012 to reach 108.7 million head according to USDA. These animals are raised only for dairying purposes mostly by small and marginal farmers. They prefer water buffaloes because their higher-fat milk sells for better prices and once culled, water buffaloes can be sold for slaughter.
In May 2017, the Indian Government imposed widespread bans on the sale at livestock markets of cows, buffaloes and other bovines destined for slaughter. To date the regulation has had only limited impact on production and trade because it was suspended by India’s Supreme Court soon after implementation. The rules are currently under review. Restrictions affecting at least the slaughter of water buffalo are likely to be rescinded ensuring that even in the worst case scenario, the Indian beef and buffalo export business will continue to thrive, at least for the foreseeable future.