India’s beef exporters face massive loss in first quarter due to lockdown

India’s meat industry has taken a huge hit due to the coronavirus outbreak, with production and export of buffalo meat plunging by around 10% since the nationwide lockdown was first imposed in late March.

While the official data is still not available for the first quarter (April-June) of the current fiscal year 2020-2021, an industry body estimates the loss to be a little over 50 billion rupees ($668.89 million). 

“We are making this estimate based on the kind of order book we would have if things would have been normal,” Fauzan Alavi, spokesperson for All India Meat & Livestock Exporters Association (AIMLEA), told Salaam Gateway over the phone. 

“Obviously, there will be effects on demand as everything was closed – right from hotels, restaurants to schools and offices …people were not going out,” he said. 

The last financial year that ended on March 31, 2020 also saw India’s beef export (almost all buffalo) falling to $3.18 billion from $3.61 billion recorded in the previous year (2018-19), a drop of close to 12% in value terms, according to official agency APEDA. 

India exported 1,152,547.31 metric tons of beef in the last financial year against 1,236,638.40 MTs in the previous fiscal year. 

The export of sheep and goat meat also fell from $125 million to $93 million in the last fiscal year, a drop of 25%, as India managed to export only 14,368 MTs in 2019-20 against 21,674 MTs in 2018-19. 

India’s meat production was hit even before the beginning of the new quarter as factories were closed for about 100 days from March to June due to the COVID-19 outbreak.  

“As restrictions were imposed by the state and central governments, all livestock markets and factories were closed during this period,” said Dr. Surendra Kumar Ranjhan, director of the New Delhi-based Mirha Exports Pvt. Ltd. 

His conservative estimate is that there was a 10% reduction in production and export of meat during the first quarter. 

SHORTAGE OF RAW MATERIALS 

Another exporter based out of Uttar Pradesh said the biggest problem it faced during the lockdown was to get raw materials. “Nobody had the stock. Only few who were having stock were able to sell the materials during the first quarter,” said Mohammad Rehan Qureshi, CEO of India Frozen Foods. 

He said that livestock markets are still not operational, but people have made different arrangements to get animals through traders, suppliers and agents who directly source from farmers. “But if the restriction continues on public gatherings and animal markets due to lockdown, there will be difficulties in the coming times,” said Mohammad Rehan. 

Although there is no official permission to start the livestock markets yet, movements of animals are happening, said Fauzan Alavi, who is also a director with Allanasons, India's largest meat exporter. “So raw materials are being sourced,” he added.

Since meat factories have begun to function since the last week of June, Dr. Ranjhan said production and exports are picking up. “Currently, there is no problem in the production and processing of meat as factories are open. Raw materials are available at better prices …. so there is no shortage as such,” he said.  

While plants are allowed to function, many exporters said they are not at full capacity. 

For instance, India Frozen Foods, which used to employ over 200 workers, is currently functioning at 50% capacity, with around 100 staff, due to government-imposed COVID-19 preventative health and safety guidelines such as maintaining social distancing. 

As a result, Mohammad Rehan said his company’s output fell while per ton production cost increased by about 10%. “We used to produce 60-70 tons per day but now we can produce around 28-30 tons per day,” he said, adding that production also dropped due to shortage of manpower, raw material and weak demand. 

Exporters say a lot of their workers who had gone back to their villages are not able to return due to lockdown. “And, even whoever is able to come, they are also scared to join due to COVID-19. So, there is a major problem of manpower,” said Mohammad Rehan.

However, All India Meat & Livestock Exporters Association said the workforce is also gradually getting to 100% as workers who went back to their villages due to lockdown are now returning. “I think in another 15-20 days it should be in order,” said spokesperson Fauzan Alavi.

He said things have started to improve but that it’s too early to get exact numbers. “Let us wait for another two months. I think by September end we will get to know about the correct picture of the quarter,” said Fauzan.  

GLOBAL MARKETS

India’s major meat export destination, China, which accounts for about 56% of its total beef exports, was also hit during the 100-day lockdown, said Dr. Rajhan, adding that sales are gradually picking up now. 

Industry sources say China does not import beef directly from India but through Vietnam, Hong Kong and Thailand, with representatives of Chinese companies opening L/Cs (letters of credit) with the banks in India or through middlemen.

“Of course, there was a drop but it wasn’t too much,” said Mohammad Rehan of India Frozen Foods, adding that there has been an increase in Chinese consumption in the first quarter. 

Allanasons’ Fauzan agrees China was closed earlier but now demands have started to come again. “There was little increase in the first quarter,” he said. 

China imported 4.75 million tonnes of meat including offal from various markets in the first half of 2020, registering 73.5% growth on the same period a year ago, according to a Reuters report that cited customs data, which stated the country’s beef imports during January to June rose 42.9% at 997,000 tonnes. 

India’s other key beef exporting markets, including Indonesia, Malaysia, Philippines, the UAE, Saudi Arabia, Algeria and Egypt, have been stable, say exporters.   

“Southeast Asia is a stable and promising market. The Middle East is also promising,” said Fauzan.

While demands have started to pick up after months of lockdown, Mohammad Rehan, who supplies buffalo meat to the GCC, African and Southeast Asian countries said it’s picking up slowly.

“Currently, it is at 50% compared to last year as no tourists are moving, people are not going out,” he said. 

Indian exporters are hopeful that sales will bounce back in the next three to four months if the virus is kept under control.  

“The prospects of Indian buffalo meat are good in the international market, provided there is no lockdown again since COVID-19 cases are increasing in India and globally,” said Dr. Ranjhan. 

(Reporting by Syed Ameen Kader; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)

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