India cattle trade ban cripples production volumes, prices rise

Photo: Cowherd driving his cattle along one of the big highways near Palitana, Gujarat, India on March 2, 2017. Anandoart/Shutterstock.com

India’s beef traders and exporters have already begun to face a supply shortage, even as the government’s ban of the sale of cattle for slaughter at animal markets is suspended for four weeks from May 30 and the Supreme Court has set June 15 to hear a petition challenging the ban.

“People are managing with whatever little supply there is. The cattle supply has come down by more than 50 percent,” Sirajuddin Qureshi, president of the All India Jamiatul Quresh told Salaam Gateway. The association of the Quresh community has traditionally been the stalwarts of the meat business in India.  

As a result of cattle shortage, many processing plants that used to source up to 90 percent of their livestock from the livestock markets, or mandis, are being forced to scale down daily production and allow capacity to remain idle.

“Earlier, we used to slaughter 250 animals per day; but now that has come down by 60 percent,” said Kamal Verma, managing director of Standard Frozen Foods Exports Pvt. Ltd., which has a beef processing plant in the northern state of Uttar Pradesh with a capacity of 70 tonnes per day.

“Actually, we need to maintain that 250 level in order to remain profitable; otherwise, it is a loss,” he added.

The factory is now running only for 10-12 days in a month, Verma said.

“At full capacity, this factory provides jobs to about 400 people; however, only 150 are employed right now.” 

Due to the shortage of supply, cattle suppliers are charging higher prices for the animals.

“Our production cost has gone up by 7-10 percent due to the rise in raw material (cattle) cost, but we are not getting higher prices from the buyers,” he added.

THE RAMADAN FACTOR

Ordinarily, Ramadan is off-peak season for many Indian beef producers, so some of the slowdown could be attributed to the time of year.

This makes it difficult to assess the true impact of the cattle trade ban, said one producer, adding that the real effect can only be gauged from July onwards.

Similarly, the true impact on exports will also be felt some weeks down the line.

“We anyway don’t do much work during this period. Once Ramadan is over and we start production at full capacity, we will come to know the actual impact of this notification,” said Ahmed Darmani, director of Hyderabad-based Telangana Foods Pvt. Ltd., which produces 10-15 tonnes a day during Ramadan in comparison to 40-45 tonnes per day in other months. 

“Also, once we get an order, it takes at least a month to start exporting the products. What we are processing at this time is to fulfil orders received before the ban was announced [three weeks ago],” he said. 

The ban was suspended for four weeks on May 30 by the Madras High Court following a petition by lawyer Selvagomathy after Prime Minister Narendra Modi's government decreed on May 23 that animal markets will only be able to trade cattle for agricultural purposes. 

Telangana Foods receives bulk orders to be shipped over a period of six months or one year, Darmani said.

“We get these orders in March and April. That is at a fixed price. So even though our production cost increases, we can’t increase our price,” he said, adding that his company has annual revenues of $2.2 million from production of 800-1,000 tonnes.

DOMESTIC PRICES SURGE

The effects of shortage are being felt in the domestic retail market, with beef prices in some states surging by 25 percent.

“We are seeing retail prices escalating by 20-25 percent depending on the local availability of livestock,” said Qureshi.

Transporters and suppliers say they are wary of their vehicles and livestock being ‘confiscated’ or attacked by the so-called ‘cow vigilantes’ who, they allege, have become more active since the cattle ban notification was announced.

“Farmers are afraid to bring their animals into the mandi. Traders are afraid to buy and transport the animals,” said a Hyderabad-based beef trader who refused to be identified fearing violence from the cow vigilantes.

“Earlier, we used to get 1,800-2,000 animals a day in a mandi, but now only 70-80 animals are coming,” he added.

He said this has resulted in his daily production falling from 30-35 tonnes to only 6-7 tonnes.

EXPORT FEARS

Exporters fear they may lose their business to other countries if this trend continues.

Qureshi, who is also the managing director of Hind Agro Industries Ltd., a joint venture between Hind Industries Ltd. and the Government of Uttar Pradesh, estimates that exports of beef from India will drop by 50 percent as production dries up and customers shift their sourcing to other countries.

Hind Agro operates one of Asia’s most modern abattoir and meat processing plants at Aligarh in Uttar Pradesh with a production capacity of 400 metric tonnes and annual revenue of more than $54.5 million.

 “Buyers are not worried or in panic as such because it’s an open market -- if we don't supply, they will go to other places. They will soon start fulfilling their requirements from our competing countries,” said Mohammed Abdulla, marketing director of Andhra Pradesh-based Al-Sami Agro Products Pvt. Ltd.

India exported 1,330,660.47 metric tonnes of buffalo meat in the financial year from April 2016 to March 2017, according to data from India’s Agricultural and Processed Food Products Export Development Authority.

Eight of the top ten importers are countries of the Organisation of Islamic Cooperation (OIC): Vietnam, Malaysia, Egypt, Indonesia, Saudi Arabia, Iraq, Algeria, United Arab Emirates, Philippines, and Oman.

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