March 3, 2010

India dairy sector calls for meat subsidy to be removed

Demand to scrap export subsidies for meat is gaining momentum in India as it has upset the dairy economics where killing animals is turning out to be more profitable in the short term, than milking for years.

A representation in this regard was made to Sharad Pawar, the Union agriculture minister. The dairy industry, in an elaborate presentation, has explained how the subsidies help slaughterhouses and thereby impact the milk production in the country. This, according to the dairy industry, is a reason behind the recent price hike.

Milk prices rose about 10% in some parts of the country to as high as INR35 (US$0.8) per litre recently. Many edible commodities are at record levels due to shortage after the monsoon failed.

"The subsidy encourages dairy owners to discard their animals early," Subhash Mandge, member of the National Dairy Development Board and president of the Madhya Pradesh State Co-operative Federation said. "This trend is observed especially after weaning. As the cost of maintaining buffaloes and cows after delivery has been going up steadily, many prefer to sell them to slaughterhouses," he said.

Currently all cow and buffalo meat exporters get 30% subsidy on exports. That incentive and the fact that fodder prices have shot through the roof is provoking farmers to send their cattle to slaughterhouse.

There are clear signs of worry as farmers in North India, the country's top milk-producing region, are up against squeezed margins after a 90% rise in fodder prices between 2006 and 2009.

In contrast, the value of meat exports has doubled in four years to INR5,000 crore in 2008-09, according to industry estimates. India shipped around 20,000 animals in 2008-09. "There is a co-relation between rise in meat exports and the declining number of dairy animals," Mandge said. The subsidies end the lives of buffaloes and cows rather early which are normally milked for 10 years. On an average, buffaloes give 21,600 litres of milk, and for cows it is 36,000 litres during their lifetime.