UP meat industry in trouble

The recent devaluation of Brazilian currency against the Indian rupee by over 40 per cent has severely hit the meat exporters of Kanpur and the adjoining areas.

The city is a centre of leather processing and tanning during which meat is obtained in large quantities as a byproduct.

Sajid Khan, who works as marketing manager at a meat export unit, said that the weakening of real had resulted in mass cancellation of export orders resulting in huge losses to the traders.

“The export has reduced by over 50 per cent during the past two months and the unsold products are lying in the cold storage,” he added.

Apart from the traders, the cold storage owners are also bearing the brunt of cancelled orders as the traders who had stored animal protein are not approaching to take out their consignment.

“Our cold stores are full till capacity while the traders are not ready to pay the storage charges owing to cancelled orders,” Ramswaroop Trivedi, who owns a cold store in Unnao, told Business Standard.

Some of the meat traders are selling their products at a loss of up to 40 per cent of the price negotiated during previous agreements. Dozens of government-licensed slaughter houses in Unnao have stopped meat production owing to the slump in demand.

Under normal circumstances, these houses export meat products of around Rs 500 crore per annum. The meat from here is exported at around $2-3 per kg to countries like Jordan, Syria, Dubai, Brazil, Vietnam and Abu Dhabi.

Leading meat exporter and JS International Director Mohammad Javed said that most of the orders emanated from Brazil, which had drastically reduced, resulting in crisis for local exporters.

“A number of importers have refused to buy at previous rates and cancelled orders,” he added. The reduced production of meat has also affected the raw hide market wherein the hide prices have registered an increase of Rs 150-200 per kg.

UP Leather Industries Association (UPLIA) President Taj Alam told Business Standard that the development had adversely affected the input costs of leather goods. They are trying to take advantage of currency hedging to obtain shielding against such currency fluctuation,” he said.