Export Potential Analysis of Indian Meat Industry

Export potential analysis of indian

meat industryPresented By : SHAYOK BARMAN

PRN NO. - 08020242006

Introduction

• India has 185 million cattle (25 million are crossbred, 160 million are indigenous),

• 98 million buffaloes• 61.5 million sheep• 124 million goats• 14 million pigs• 1 million camels and • 480 million poultry

Change in Population

Change in Population

Major Areas of Production:

• Maharashtra• A.P• U.P• Rajasthan• Gujarat

• India’s international trade in livestock and livestock products is mainly in live animals (17%), meat and meat products (82%), dairy products and eggs (1%).

• At the global level, India’s export and import accounts for 0.17% of each.

• In total, these animal produce 5 million tonnes of meat and meat products, valued at US$ 130 million

• Animal rearing has remained traditionally a small scale undertaking for milk or draught purposes.

• Many animals in the sub-continent are for dual purpose and are used for meat at the end of their breeding or milk producing lives.

• The total number of animals slaughtered for meat in India rose from 66 million in 1980 to 106 million in 2000 almost double

• There was a rise in the total number of cattle and buffaloes slaughtered for meat in India from 15 million in 1980 to 24 million in 2000

• There has also been an increase in total beef meat and buffalo meat production From 1million tonnes in 1980 to 2 million in 2000.

• Beef meat available in India is the meat of the water buffalo.

• The Indian meat production has been growing at a Combined Average Growth Rate (CAGR) of 5% for the last one decade.

• The export of buffalo meat has, however, been growing at a CAGR of about 8% for the last one decade.

• Export of Buffalo Meat during 2007-2008 was 500,000 tonnes valued at US $ 750 million.

• As for future projections, export is likely to increase by 5% per annum.

• Only 2% of meat produced is processed for value addition.

• Similarly, the meat exported from India is also fresh and chilled, but very small portion goes into value addition and export.

World bovine meat scenario

4 major bovine meat producing clusters:• North America (USA and Canada)• South America (including Brazil, Argentina

and Uruguay)• Oceanic countries (Australia and New

Zealand)• Europe (British Isles and continental Europe).

Europe

• Mad Cow Disease or Bovine Spongiform Encephalopathy (BSE)

• EU’s decision to reduce agro subsidy gradually• Strengthening Euro• Net importer

North America

• Incidence of BSE in USA and Canada• Lost export market to Japan• Investments in the sector not increasing.• USA and Canada continue to be very large

bovine meat consumers

South America

• Abundant grasslands• Brazil has expanded substantially to fill the

world bovine meat supply gap• Supply will not be able to keep pace with

export demand• domestic demand growing even more rapidly• firming up prices

Oceanic countries

• Less production• Incidence of drought• High price

Major Importers of Buffalo meat

• EU• Japan • Malaysia• Korea• Russia• USA• S. Arabia• Philippines• Mauritius

Major Competitors

• Argentina• Brazil• Uruguay• New Zealand• Australia

Brazilian beef export

Japanese beef imports

World Beef Consumption

0

50

100

150

200

250

300

350E

UR

/100

kg

carc

ass

wei

ght

Total cost of Beef Production in 2007

Cash Cost

Source: IFCN Report 2007Source: comtrade

Focus Market

• Middle East• West Asia• North and West Africa• South East Asia• Russia• CIS• EU• Central America and the Caribbean

Value in Rs. Lakh, Quantity in MT

CountryQTY(2004-

2005)Value(2004-

2005)QTY(2005-

2006)Value(2005-

2006)QTY(2006-

2007)Value(2006-

2007)

MALAYSIA 73,060.36 39,656.64 82,337.23 49,938.07 69,443.00 45,150.14

ANGOLA 26,678.02 12,916.69 39,570.41 21,846.33 47,441.11 30,708.23

PHILIPPINES 39,027.74 19,622.08 48,917.88 26,927.75 46,203.22 27,512.84

KUWAIT 15,788.05 9,069.27 34,108.37 21,615.24 40,298.71 27,154.69

SAUDI ARABIA 25,394.08 14,194.74 36,757.21 22,805.01 30,751.64 24,526.85

U ARAB EMTS 22,140.05 12,371.36 33,098.39 20,283.81 29,890.94 22,095.62

JORDAN 22,772.67 12,374.58 39,044.18 21,984.91 28,654.99 19,728.74

VIETNAM SOC REP 3,052.59 1,730.79 12,255.45 7,579.84 21,187.81 14,697.73

PAKISTAN 71.5 30.74 5,230.55 2,584.89 25,606.38 13,309.63

IRAN 8,320.65 4,074.30 16,986.48 8,390.31 19,671.90 12,165.44

EGYPT A RP 0 0 25 19.28 12,145.34 9,434.09

Existing Indian Buffalo meat export market and growth projection

Source: faostat

2005-06 2006-07 2007-08 2008-09 2009-10 0

100

200

300

400

500

600

700

400450

500550

600

Year

Qty in '000 MTs

TOP 10 EXPORTERS

1. ALLANASONS LIMITED

2. HIND AGRO INDUSTRIES LIMITED

3. AL-NAFEES FROZEN FOOD EXPORTS

4. INDAGRO FOODS LIMITED.

5. AL NOOR EXPORTS

6. AL- QURESH EXPORTS

7. ABBOTT COLD STORAGES PVT LTD

8. AMROON FOODS PVT. LTD.

9. SRM AGRO FOODS

10. HIND INDUSTRIES LTD.

S.No Company Processing Plant

Location Capacity Annual

Capacity (tones)

1. Allanasons Fully Integrated Buffalo Sheep Goats -Do- -do- -do- Partially integrated

- Aurangabad- Unnao- Kolkata- Hyderabad- Sahibabad

90,00090,000 100,000 90,000 50,000

2. Hind Agro Industries Ltd

Fully Integrated Buffalo Sheep and GoatPartially Integrated-Do--Do--Do-

- Aligarh, U.P. -Sahibabad, UP- Meerut, UP- Khurja, UP -Lawrence Rd., Delhi

120,000 50,00025,00020,00020,000

3. Al-Kabeer Fully Integrated Buffalo Sheep & Goat

Hyderabad, AP 60,000

Growth Promotional Activities

• The Indian meat is of an excellent quality and safe for human consumption.

• Indian meat is also very competitive in international market and has created a special niche in most of the importing countries.

• Buffalo meat blends very well with other value added products like hot dogs, corn beef, salamis and, therefore, has good market.

• Indian meat which is genuinely HALAL, is exported to about 60 countries in South East Asia, Middle East, Africa and Eastern Europe.

• However, it is not exported to West Europe and the USA because of their stringent Sanitary and Phytosanitary(SPS) requirements.

• As soon as we are able to control and eradicate FMD from the country, we would be able to export meat to these countries also

Constraints

• The major non-tariff barriers faced by Indian meat exporters in international markets is the bogey of FMD prevalence in the country.

• Though there is no ban on the export of meat from FMD infected countries to the FMD free countries as per Chapter 2 of International Animal Health Code for Terrestrial Animals.

• Exports from India are banned by almost all Western European countries.

• There should be no restriction for import of meat from India especially if it has been deboned, deglanded and chilled for 24 hours before freezing and exporting.

• This eliminates any chance of exporting FMD virus from the infected country to non-infected country.

Livestock Health

• It plays a major role in world meat trade• India has always been free from the dreaded

Mad Cow Disease (BSE) and has been free from Rinderpest since 1995.

• No incidence of Contagious Bovine Pleuro Pneumonia (CBPP) in last 15 yrs

• AIMLEA is playing a leading role in this important change in world thinking

• A major programme has been initiated by the Central Government since August 2003 through the FMD-Control Programme (FMD-CP) covering 54 districts across the country

• the Government has introduced the Infectious Disease Control Bill 2005 in the Winter Session of the Parliament which includes restriction on the movement of animals.

International Standards for export of Buffalo meat

• Codex Alimentarius Commission (Codex) of FAO/WTO.

• HACCP• ISO• Veterinary or Animal Health certificate• SPS measures• Standards of internationally EU accepted

bodies such as FAO, ICAR, UNECE etc.

Government’s crucial role

• The meat export industry touches rural development at the very basic level of the poor, marginal, landless farmers whose primary source of livelihood and existence comes from small livestock holdings. This is in line with and supports the progressive, pro-farmer, rural development oriented policies of the Government of India.

• One of the most important virtues of Indian Buffalo meat is its competitive price (USP).

Issues which persist and currently affect the industry

• Inclusion of meat as an eligible item in the “Vishesh Krishi Upaj Yojana” (Special Agricultural Produce Scheme)

• Restoration of APEDA Financial Assistance for upgradation of export oriented abattoirs / processing plants as was applicable during 1997-2002

• Inclusion of Buffalo meat under APEDA’s Transport Assistance Scheme for new markets in Africa / CIS where freight cost from India for reefer containers is much higher than from competing countries

• Restoration of DEPB rates for frozen Buffalo meat• Exemption from Service Tax on transportation of

meat products processed for exports. This is presently applicable only for fruits, vegetables, eggs or milk even for domestic consumption

• Ministry of Food Processing Industry’s grants as per their published Scheme (currently being denied)

Future of male buffalo

• Use as draught power reducing• Hence reduction in population• Male calf therefore is unfortunately not cared

for and resultantly does not survive• It is expected that over a period a new, niche

market, with a premium price realization for Buffalo calf meat, would emerge and in that case even intensive male calf rearing could be self sustaining.

The Slaughter House Process

ITC HS Code• 02021000 - Bovine carcasses and half carcasses, frozen • 02013000 - Bovine cuts boneless, fresh or chilled • 02012000 - Bovine cuts bone in, fresh or chilled • 02011000 - Bovine carcasses and half carcasses, fresh or chilled • 02062100 - Tongues of bovine animals (frozen) • 02022000 - Bovine cuts bone in, frozen • 02023000 - Bovine cuts boneless, frozen • 02061000 - Edible offal of Bovine animals, fresh or chilled • 02062900 - Others parts of bovine animals • 02062200 - Livers of bovine animals (frozen)

Cost of Processing

Cost( in Rs. Lacs)

1 Land & Building(5 acres) 300

2 Plant and Machinery 250

3 Working capital 50

4 Misc Expenses 20

TC 620

ROI 57%

Break even 24%

Plant Capacity: 1 ton per day

Source: niir.org

Project Assistance

Scheme Implementing Agency

Pattern for Disbursement

Setting up/ expansion/ modernization of meat processing plant

Mofpi Assistance is provided @ 25 percent of the project cost in general areas and 33.33 percent in difficult areas subject to a maximum of Rs. 50 lacs and Rs. 75 lacs respectively.

Scheme on packaging center/ integrated cold chain facilities and value-added centers

Mofpi 25% of the total cost of plant and machinery (33% in backward areas) subject to a ceiling of Rs. 200 lacs

contd…Scheme Implementing

AgencyPattern for Disbursement

Schemes for infrastructure development ( setting up of specialized storage facilities such as high humidity cold storage, deep freezers, controlled or modified atmosphere)

APEDA 25 % of total cost subject to a ceiling of Rs. 10 lacs

• No custom, excise duty and sales tax duty on 100% EOUs.

• 100% FDI permitted.

• Marketing partnership/technology collaboration with meat processing equipment suppliers.

Packaging

• Plastic film and laminates plays significant role in retention of the quality and extension of shelf life and also promote marketability

• Vacuum packaged have better flavor retention.

The principal role of fresh meat package is:

• To prevent moisture loss• To offer the product to the consumers in most

desirable colour-red bloom• To prevent further bacterial contamination of

meat• To arrest pick up of foreign flavour and odour

by meat• To control oxygen transfer

Packaging Techniques

• Tray with Over-wrap• Shrink Packaging• Vacuum Packaging• Skin Packaging• Modified Atmosphere Packaging

Quality Characteristics

• Lower intramuscular fat• Cholesterol and calories• Higher units of essential AA • Iron content• Moisture 76.4%• Protein- 20.4%• Fat – 1.5%• Ash - 0.12 %• Water soluble protein – 5.1 %• Salt soluble protein – 7.2%

Case Study

• The plant and the process technology has been set up in collaboration with world’s leading companies from Australia, New Zealand and Europe.

• This plant has been approved by the Agricultural and Processed Food Products Export Development Authority (APEDA), Ministry of Commerce, Government of India for export of meat and meat products.

• In order to ensure that the animals used for the production of meat for export, the company has developed a Hind Livestock Development Foundation (HDLF) a model backward integration with 160,000 farmers raising more than half-a-million buffaloes in 7,200 villages under semi-contracted farming districts in eight districts of western Uttar Pradesh.

• As a part of the programme HAIL provides farmers door-to-door veterinary services including vaccinations and have created a 110 km disease free-zone in respect of diseases listed under “A”list of OIE.

• The Government of UP has also declared this zone as free from Rinderpest, FMD, CBPP, Blue Tongue, PPR, etc.

• As a result of this there has been no report of FMD during last six years

• For the rearing of animals, the company provides feed at subsidised rates from its own feed mill to ensure the right ingredients are used in the feed.

• Animals for slaughter and meat export are sourced from this zone by the company ensuring traceability of both meat and feed ingredients used for rearing the animals

• In addition to the above, there are integrated livestock village farms to raise male buffalo calves procured from the above villages at the age of 9-12 months.

• The farm has its own feed mill and 70 acres of land for growing green fodder.

• The main objective of the farm is to raise quality animals under disease free conditions with an individual and traceability to fulfil the requirements of Code Alimentariusare the primary production level.

• The HAIL follows SPS measures given in the OIE Guidelines, and the plants are certified for HACCP (Hazard Analysis Critical Control Points), ISO 9002 meeting the OIE norms.

• The identification and the traceability of the animals from production source to the abattoirs is fully maintained.

• It is ensured that animals have been raised under disease free conditions given in the list “A”of OIE.

• In the HACCP, the Critical Control Points (CCP) are closely monitored right from reception of the animals (procured from disease free areas) at the plant, ante-mortem examination, post mortem examination, chilling of carcasses at 0-4°C for 24 hours to bring pH level below 7, freezing of deboned meat at -35°C to -40°C for 10-12 hours and storage at -18°C.

• All these measures preclude the possibility of transferring any contagious/infectious/zoonotic disease to the importing countries

• Almost all the export-oriented plants follow the safety specifications given by the Meat and Meat Product Order of 1993 issued by the Directorate of Marketing and Inspection, Government of India.

Deboning process

SWOT ANALYSIS

Strength

• Diverse and rich resource base• Location advantage• Large livestock population• Good quality (Lean meat and genuine “HALAL”)• Better disease control• Competitive price• Excellent Veterinary Infrastructure

Weakness

• Insufficient infrastructure• Obsolete machinery• Low processing level• Inadequate credit supply• Dominance of the unorganised and

fragmented industry players• Freight cost for reefer containers is much

higher than the competing countries

Opportunity

• New emerging market• Changing consumption pattern• Raise male buffalo calves• Contractual farming as backward integration• Value addition and diversification• Better utilization of by-product• Better positive image at global level• Innovative marketing approach.

Oppurtunity

The meat export industry not only processes meat for export but provides a range of raw materials like

• Hides• Offals (for crucial pharmaceutical and pet food

application) and • Renders all inedible meat tissues and bones to give

important by products such as gel bones (for gelatin production) and

• Meat & bone meal and technical fat used in poultry feed.

Patents

• “ PROCESSING OF BUFFALO MEAT CRACKLES-A CRISP SNACK”

Threats

• Quality standards• Labeling and traceability• Non availability of tested indigenous

technology for commercial scale processing• High cost of imported meat processing

equipments

Environment protection requirements

• Solid waste management and by-products

• Quarantine of sick and diseased animals

• Wastewater treatment

Conclusion

• The Buffalo meat export industry has grown well.• The potential for rapid growth is high, particularly if

a specific time bound plan of action between the various wings of the Government and the meat export industry is drawn up

• Livestock health issues need to be further addressed.

• Quality and more importantly traceability issues, will need to be addressed carefully in the emerging scenario

Thank you