New certification body in Mexico hopeful for start of halal meat exports to Indonesia

In 2002, Fitra Ismu Kusumo flew from Indonesia to Mexico to study anthropology, at the same time starting an organization to promote Indonesian shadow puppetry and gamelan. Twenty years later today, the cultural activist finds himself in a position to boost the halal meat trade between the two countries he calls home.

Kusumo opened Halal Quality Mexico S.A. de CV in July 2019 after working at the Indonesian embassy for over nine years and gaining valuable industry-relevant experience: he joined Organización Mexicana de Certificación Ganadera y Alimentaria A.C. (OMECEGA) and opened an office for UAE-based Regulatory Affairs Conformity Services (RACS).

“We’ve applied for recognition with the Southeast Asian authorities in-charge of halal affairs first because Indonesia (BPJPH), Malaysia (JAKIM), and Singapore (MUIS) require a locally registered certification body,” Kusumo told Salaam Gateway. “These authorizations are a lot cheaper than the GCC ones, too.”

Currently, none of the Mexico-based halal certification bodies is recognized or accredited by major halal authorities JAKIM, the GCC's GAC or the UAE's ESMA.

Kusumo and Halal Quality Mexico will have to wait a while as the COVID-19 pandemic slowed down the foreign halal certification body authorization process, despite prior local market visits.

Another challenge, that of financing the business, has already been solved. “After having received the blessings of the local Muslim community, I went from door to door looking for sponsorship,” said Kusumo.

The entrepreneur received support from a U.S.-based halal food manufacturer whose name he didn’t want to disclose, only revealing that his partner provided the halal inflight catering for the American Airlines flight from Mexico City to Dubai when it was still operational.

MEAT TRADE

Kusumo is facing a Mexican halal meat trade languishing at zero.

But it wasn’t always this way.

In 2017, President Enrique Peña Nieto became concerned about Donald Trump’s stance on trade with Mexico and developed big plans to diversify his country’s market portfolio away from dependence on U.S. buyers and grow halal exports, targeting Muslim-majority countries.

However, when Andrés Manuel López Obrador was voted into office in December 2018, he abolished subsidies for halal certifications, according to Kusumo.

According to government agency ProMéxico, the country’s agriculture ministry only supported Spain-headquartered Instituto Halal, granting discounts between 30% to 50% on the Euro 2,000 to 3,000 annual halal certification costs.

Additionally, Obrador closed down ProMéxico, one of the organizations behind the National Strategy for the Advancement of Mexican Exports to the Global Halal Market 2016–2018.

In five years, shipments of meat and live animals to Muslim-majority nations nosedived, from around $1.3 million in 2015 to $394,000 in 2018 and zero in 2019.

In the meantime, Mexico’s meat exports to the U.S. surged. The demand increased last year as the U.S. meat industry struggled with the COVID-19 pandemic, resulting in plant closures, particularly during March and April 2020, reports the United States Department of Agriculture (USDA).

USA and Canada are Mexico’s largest meat buyers, which makes economic sense following the three countries replacing the North American Free Trade Agreement (NAFTA) with the United States–Mexico–Canada Agreement (USMCA) in September 2018. Until USMCA’s final ratification by March 2020, NAFTA regulations remained in force.

COMPETITIVE

Kusumo indicated that Indonesia’s private sector is looking at Mexican halal meat imports in the region of 60,000 – 180,000 tons a year. The first shipment of 18,000 cow livestock is currently being negotiated as part of a potential deal of 500,000 cattle a year.

According to Kusumo, Singapore has also expressed interest in 46 to 50 containers a month of Mexican meat, mainly halal-certified beef and sheep.

Mexico is looking at an upswing in its meat industry and Kusumo has reason to look positively to potential exports. According to the U.S. Department of Agriculture, thanks to improved practices Mexico is well-positioned to grow its beef production from 2.09 million metric tons in 2020 to 2.15 million metric tons this year.

This is a timely situation for Mexico as the USDA last month estimated global meat production for 2020 to be fractionally lower at 60.1 million metric tons and beef exports down by 2.8% to 10.5 million metric tons.

How deeply the 2020 trends and economic developments will impact the global meat production going forward, remains to be seen. USDA expects a slight rebound to 61.1 million metric tons in 2021, not quite reaching the 2019 levels of 61.6 million metric tons.  

Limited availability of animals for slaughter in Australia and Brazil, and supply issues in India contribute to the production contraction, reported the UN’s Food and Agriculture Organization (FAO) in December 2020.

These three countries dominated Indonesia’s beef imports by dollar value in 2019, with Australia and India first and second, and Brazil fifth after USA and New Zealand, according to U.N.’s ITC Trade Map. By volume, India recorded a share of 48.7% and Australia 39.3%.

Indonesia’s main source market for live animals and meat, Australia, is experiencing a sharp drop in national livestock as a result of the devastating bush fires at the beginning of 2020, and, according to FAO, the herd rebuilding efforts cut production by about 14% to 2.1 million tons. Although the commonwealth nation had duty-free access to Indonesia for 575,000 live cattle a year under the Indonesia–Australia Comprehensive Economic Partnership Agreement (IA–CEPA), signed in March 2019, Australia may struggle to live up to the numbers, which puts Indonesia in a difficult position.

In India, a drop in productivity at slaughterhouses is leading to a nearly 15% output reduction to over 2 million tons.

As for Brazil, in November 2019, Indonesia lifted the import ban for Brazilian bovine and poultry meat following a WTO ruling, resulting in fresh and chilled bovine meat sales worth $15.5 million the same year. However, FAO also forecasts Brazil’s bovine meat production to contract by 1.3%.

Brazil attracts clients in the global market with large volumes and low prices.

“The Brazilians have a meager price that Mexicans don’t want to fight,” Kusumo said.

“But we compete on quality.”

(Reporting by Petra Loho; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)

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