MLBA 9: June / July 2009

 

 

 

 

Anyone unfamiliar with Asia might be tempted to look at India and China's meat markets in mono­lithic terms. Both countries sport highly educated, low income populations of over a billion, near double-digit economic growth and fast rising incomes. All of that is true but this is where the similarities end.

 

Historically, the Chinese ate more meat than anyone else in Asia. Today, although it is a developing country, China enjoys per capita meat consumption roughly com­parable to that of Singapore, with far more red meat in the diet too. Economic growth has poised China's per capita meat consumption to overtake that of even its wealthy Asian neighbours. All this, combined with a semi-liberal­ised feed and meat sector, has created a prosperous, dy­namic, increasingly integrated meat processing sector.

 

India, on the other hand, balanced its scarcer land and feed resources with a majority vegetarian (Hindu) culture. As a kilogramme of meat requires ten times more grain than direct human grain consumption, the resulting low per capita meat consumption balanced feed grain supply and demand, at least until recently.

 

A new, educated, high-income generation of Indians are leading westernised, meat-eating lifestyles that increas­ingly set the tone for this once conservative society. Conse­quently, Indian demand for chicken and ruminants is grow­ing far more rapidly than even in China, with a population of equivalent size.

 

Nor does the fact that India has vegetarian roots limit this market. Instead, the low per capita consumption level it is starting from gives it far more scope for long-term expansion than even China's meat industry. Maurice R. Landes of the USDA's Economic Research Service states that, "studies suggest that while 20-30 percent of [Indian] consumers have strict vegetarian preferences, meat con­sumption by the remaining 70-80 percent is limited more by income than religious preference." This means that if incomes rise, India's meat demand will put a strain on do­mestic meat and grain supplies that does not have any par­allel in China's experience.

 

Furthermore, not only is India several decades behind China in economic development but its meat and livestock sector is several orders of magnitude behind it too. The physical infrastructure that can be taken for granted in Chi­na cannot be India, thereby segmenting the subcontinent's market and holding back the forces of horizontal consoli­dation and vertical integration with feed mills. Trade laws governing Indian meat are far less liberalised, both with regards to imports and exports. Hence, Indian meat and livestock's long-term potential is exceptionally, almost un­imaginably bright, yet daunting - and in equal measure.

 

In our survey of these two vast meat and livestock mar­kets, we take a look at the current state of Chinese and Indian livestock markets, while projecting their future de­velopment prospects.

 

 

Volatile years of inflation, deflation and consolidation are bearing fruit as meat and livestock industry approaches maturity.

With its high population, fast economic growth and historically high meat consumption (given its developing country status), no nation's meat markets are as large as those of China. In this huge, dy­namic domestic meat sector, with China accounting for more than half of the world's hog population, pork leads the way. Here, however, many changes have been afoot in recent years.

 

 

This vegetarian society's meat sector is growing rapidly, yet bound up in trade restrictions, requires capital, but makes its importation difficult. We examine the unlimited potential and pressing limitations in this most paradoxical of countries.

 

For India, livestock is an impor­tant sub-sector of the national agricultural economy. Between 1983 and 1999, con­sumption of meat, eggs and fish rose by 85 percent, for a cumulative annual growth rate of approximately five per­cent a year. When population growth is subtracted, per capita protein intake increased by approximately two to three percent per annum. Moreover, growth has continued at almost the same rapid pace since 2000.