February 4, 2010

India squeezes gold out of meat exports

The meat sector is now a key contributor to India's economy, especially during the economic downturn, as 2008-09 meat prices rose over 100% compared to three years ago.

Exports from predominantly vegetarian India have doubled in just four years to a projected Rs5,000 crore in 2008-09.

Poultry exports are expected to double to over Rs8 billion (US$173.5 million) by the coming fiscal. Buffalo meat exports increased 45% between April 2008-January 2009 compared to the previous year period.

The rise in the cost of feed and maintenance has made it highly uneconomical for many farmers to keep a dry buffalo, so the animals are sent to the slaughterhouse once they become dry, said an official.

This has become the common trend in all peri-urban areas, especially in milksheds, a New Delhi-based dairy sector official said.

Meat export incentives in 2008-09 were about Rs484 crore, with prices rising from Rs57 per kg in 2005-06 to Rs115 per kg in 2008-09, indicating a price hike of 57% over the three-year period.

Exports of raw cattle feed also surged 101% between 2006 and 2009. Cattle feed ingredients sufficient to feed 3.3 million animals were exported, translating into 9.9 billion litres of milk annually or 10% of India's total milk production. The lucrative exports also pushed up the price of cattle feed ingredients by an average 90% between 2006 and 2009.

But the Indian Dairy Association (IDA) is concerned that more higher-producing animals are heading to slaughterhouses, causing a drain on local genetic resources. Meat exports are getting an unusually high incentives from the government, and this would not be conducive to the growth of the livestock sector, according to an IDA official.

The government is, however, are keen on tapping into the highly profitable meat markets of West Asia and Southeast Asia, as India is ideally situated between the two, according to a Ministry of Food Processing Industries (MFPI) official.

In addition to nil IT and excise tax, the MFPI has urged states to fully exempt perishable foods from taxes and cap taxes on non perishables at 4%. There are no restrictions on the export of poultry and poultry products, and the government provides some transport subsidy. The sector is also allowed 100% foreign direct investment (FDI).

The government has also launched a comprehensive scheme to modernise slaughterhouses nationwide to address quality standards, contamination and check wastage, and offered incentives to encourage research and development for improved packaging and product and processed development.