Last week, news broke that one of the world’s largest bovine meat exporters, India, had made a ruling against the slaughter of buffalo and cattle which could lead to the elimination of their export trade. With much of India’s exports destined for some of Australia’s key beef and live cattle markets in South-East Asia, this looks like great news for Australia – if the ban is implemented. But look a little closer and it may not be the massive windfall initially expected.
India is one of the largest bovine exporters in the world. According to the United States Department of Agriculture (USDA), India exported 1.76 million metric tonnes of bovine meat in 2016. To put this in context, last year Brazil exported 1.7 million tonnes and Australia exported 1.5 million tonnes. With volumes of this magnitude, a ban on sale of cattle and buffalo for slaughter and cut in exports will have a profound effect on global protein trade.
India’s principal export markets include Vietnam, Malaysia and Philippines – key markets for Australia. In 2016, Australia exported 236,000 head of live cattle to these markets along with 39,000 tonnes (swt) of beef. If India was to withdraw from these markets it would remove about 779,000 tonnes (or the equivalent of around 2.7 million head of live cattle) from these three markets. Surely a boon for Australia?
Possibly… but a lot will depend on the consumers’ willingness or ability to trade up. The attraction of buffalo in South-East Asia is that it can do the same thing as beef – whether ground up or slow cooked in curries – but at a fraction of the price. As a consumer that no longer has access to this cheap protein, do you trade up and pay for the more expensive red meat or do you look for alternative proteins or possibly alternative suppliers? Australian cattle and beef will continue to face competition in these markets, it will now just be in the form of chicken or Brazil – already supplying beef to Vietnam, Malaysia and Philippines.
Given the volume of Indian product in the global market, a redistribution to cover any gap may see the whole beef market lift. As a result Australia may see gains in other markets and not necessarily those where India has a presence.
One problem if India withdraws from global bovine trade is that a potential reduction in global supply may cause prices to rise, which in turn may stimulate production from other suppliers. But if the trade is stopped it can just as easily be restarted and with even more cattle in the system, a re-entry of India would severely depress prices. We must be careful what we wish for.
