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April 15, 2016
Will India's government slaughter its bull market for beef? A success story under siege from within
An eFeedLink Hot Topic    
  • The criminalizing of not only cattle slaughter but even beef's possession, consumption or transport seriously impacts the entire supply chain, and even its logistics
  • Vigilant violence coincident with beef's criminalization has caused the price spread between beef derived from cows and buffaloes to narrow
  • Caught between drought and markets crippled by draconian laws, farmers are abandoning their cattle
  • All this is damaging the industry's reputation and puts a cloud over India's ability to sustain mass exporting over the long term
  • The extremist legislation's victims are not Indian exporters but poor farmers and low-income urban residents
Recent years has seen India shock the agribusiness world by unseating Brazil to become the world's top beef exporter in 2013. Australia briefly overtook India in 2014 but with the former's cattle numbers falling steeply, India is expected to lead the world in beef exports this year, with a USDA estimated 1.95 million tonnes.
With shipment volumes multiplying nearly six times and expanding by 13.2% annually since the year 2000, it is a shame that more than just economics is undermining Indian beef's export momentum.
Ever since Indian prime minister Narendra Modi was elected, his Hindu fundamentalist Bharatiya Janata Party (BJP) has aggressively enacted cow slaughtering bans and criminalized its beef industry in one Indian state after another.
Already banned in most of the country, an additional six Indian states have banned cow slaughter since Modi was elected. Besides widening the geographic scope of outlawing cow slaughtering, many Indian states broadened their existing bans to include bulls and bullocks, which were previously exempt from slaughtering restrictions. Eventually, these and similar new laws may impair Indian cattle markets and eventually, its standing in the world beef market.
Not content to merely ban cow slaughtering, several states enacted criminal penalties that one usually associates with drug dealing against the consumption, possession or even trafficking of beef. Five Indian states now have maximum 10-year jail sentences for cattle slaughter.
Other states passed jail sentences for cattle slaughter, beef consumption, possession or transport ranging from six months to seven years. Fines range from Rs1,000 (US$15.00) to Rs100,000 (US$1,500). These are financially significant sums in a country where per capita income is below US$3,000/person and most farmers earn far less.
Furthermore, these extremist restrictions on the bovine sector have coincided with escalating violence against cattle traders and growers by emboldened Hindu vigilantes. In September 2015, an angry mob lynched a man who had been falsely accused of eating beef. Less than two months ago, two cow herders were hung from trees by alleged murderers belonging to a cow protection group.
Along with threatening the personal safety of Indian cattle herders, legislative restrictions are seriously impacting cattle growing returns and with it, India's ability to remain a reliable beef supplier. One reason India was only the number two beef exporter last year is because volumes fell 13% on-year in the April to December 2015 period, shortly after a succession of states banned or criminalized beef or cattle slaughtering.
The logistics of India's beef supply chain has also been seriously impacted. For example, in Maharashtra (India's richest state) and Haryana, even the sale and even transport of beef across the state has been made illegal. According to a 19 March 2015 report in The Business Standard ("Beef ban: Mutton, buffalo meat prices may rise in Delhi"), "The ban on transportation and sale of beef in Maharashtra and Haryana …has left exporters in Kolkata worried."
Noting that West Bengal state once shipped 200,000 to 300,000 tonnes of beef monthly to Singapore, Thailand and Malaysia, it quotes Akash Arora, managing director of beef exporter Alvira Enterprise stating, ""Our export orders have shrunk as buyers think we will not be able to meet our commitment in time because of the ban. That apart, many exporters feel we will send buffalo meet instead of beef."
Alongside the inevitable impact of transport bans on cross-country logistics, cattle farmers are already paying a steep financial price. According to a 29 March 2016 Reuters report ("Unable to sell cattle, Indian farmers have a beef with Modi's BJP"), cattle prices in Maharashtra state fell by 40% to 60% within months after these new laws were passed.
Drastic as this price deflation may be, these numbers do not capture the situation's true severity: In the past, farmers in states that banned cattle slaughter could transport them to those where it was still legal to do so. With Maharashtra and several other states banning even the transport of beef or cows destined for slaughter, finding buyers for mature cattle is becoming impossible in many regions.
Revaji Choudhary, a farmer quoted by Reuters notes that he purchased his bulls for Rs40,000/head (US$600) but now that they are fully grown, he cannot even find a buyer for them at Rs20,000/head (US$300). With the markets normal functioning impaired, price no longer act as signals on what to produce or export.
For example, the resulting logistical congestion, while steeply decreasing the cost of beef, has boosted the price of lower-quality buffalo meat, which is not as severely impacted by the new laws.  This is very bad for exports, as the lowest cost Indian beef exported to Southeast Asian countries such as Vietnam is actually obtained from buffaloes.
A narrowing price spread between meat derived from cattle and buffalo, though a side effect of the above mentioned bans, may make it more difficult for Indian beef to compete against higher quality exports from other countries. This already appears to be happening. According to a 6 April 2016 article at Indian news site Daily O ("Beef ban kicking Indians in the gut. Does Modi sarkar care?"), "The impact of the call for the ban can be gauged by the ongoing turbulence in international markets, where the cost competitiveness of Indian beef in relation to Brazil and other top exporters has abraded."
These new laws have also disrupted the cattle market's normal functioning, which usually follows seasons and rainfall patterns. For centuries, Indian farmers from a diversity of religious backgrounds would get through a dry season or extended drought year by selling their cattle to Muslim butchers. They would then restock their herds after the monsoon season, when pastureland recovers and feed supplies are assured. Unfortunately, the passing of these drastic new laws and subsequent seizing up of local cattle markets coincided with a drought.

Unable to provide neither feed nor water their cattle on one hand, farmers are no longer able to cut their losses by selling their herds to slaughterhouses. The Daily O article stated that, "Those who would earlier sell their old cattle to slaughterhouses are now forced to abandon them." With some activists stating that up to 700,000 cows may have been abandoned in Maharashtra state alone, the number abandoned across the whole of India is very likely to exceed one million head.
Over the short term, the good news is that while all this causes great economic distress for its poorest agribusiness stakeholders, for now, India's standing in the world beef market is not materially impacted: With Australian production falling by more than Brazil can boost its output, for 2016, the USDA expects India to remain the world's top beef exporter.
But focusing on India's international standing leaves us blind to the new laws' impact on hundreds of millions of Indians themselves. Despite religious prohibitions against eating beef, at a USDA estimated 2.3 million tonnes, India has the world's fifth highest beef consumption, with only America, China, Brazil and China eating more. Its beef consumption is also rising faster than that of any other top consumer.
Moreover, India's 2kg per capita beef consumption is not representative of Indian beef's dynamic internal market: Out of a population of 1.1 billion, 200 million are Muslims or Christians, though only a minority of the former (30%) and latter (26%) eat beef.
Even so, the 83.5 million Indians who eat beef regularly have a per capita consumption of approximately 27.6kg. –That is a demographic larger than the combined populations of Canada, Australia and New Zealand that eats more 20% beef and higher quality cuts than the average American. 
Sadly, there is another group of statistically undocumented beef eaters who are likely to be impacted by the ongoing wave of bovine industry restrictions. It has long been known that when the poor cannot afford the rising cost of vegetables and legumes, they resort to eating low-cost beef smuggled from the carcasses of cattle, some of them from cow shelters. 
The Daily O article quotes a resident from one of New Delhi's poorer areas stating, "The cheapest source of protein we can afford is meat of dead-cattle that we get secretly from specific sellers somehow connected to cow-shelters." The article concludes that, "a large section of the society –which fed on them…has been deprived of their biggest source of protein."
Unlike India's cattle farmers, its beef exporters and trading houses are wealthy, powerful individuals. At this time, it is not certain the if the bans on cattle slaughtering and criminalizing of beef's possession, consumption and transportation will destroy India's largest food export line. Even if it does, beef exporting companies are as likely to continue prospering as the lawmakers who disrupted this nation's greatest agribusiness success story.
The only certain victims of the Indian government's undermining of its beef cattle sector are hardworking farmers and majority urban poor.

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