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With Brazil’s beef exports reportedly having plunged 99 per cent after many nations banned beef imports owing to a safety scandal and the Yogi administration in Uttar Pradesh cracking down on illegal slaughter houses in the state, the ones recognised by Agricultural & Processed Foods Export Development Authority (APERDA) could make hay while the sun shines. That’s if the enhanced availability of animals for slaughter to their registered abattoirs is not disrupted and their factories are able to ramp up production to meet global demand owing to the Brazilian crisis.
India and Brazil exported almost the same amount of beef in 2016-17. The biggest beef importers in the world were China, Japan and Russia. Uttar Pradesh, meanwhile, has the largest beef-producing capacity in the country with 33 slaughter houses registered with the government and hundreds of illegal ones that process both meat and hide.
This is where Yogi’s crackdown on the illegal ones could be a boon to the registered ones, all of which earn billions of dollars every year through beef exports primarily to the Middle East.
The star of the slaughter house stable and the largest player in the state is Allana Sons, India's leading buffalo meat exporter. Seven of the 33 abattoirs registered with APERDA in the state are run by Allana Sons and its associate companies. UP’s slaughter houses, though spread across the state, are primarily concentrated in the western part. There are five each in Aligarh and Ghaziabad, and four in Unnao. Allana Sons runs slaughter facilities in all these districts and others.
The company’s balance sheets show that it clocked a turnover of Rs 10,945 crore in 2015-16, earning a profit of Rs 145 crore (the company also trades in coffee and other agro products). Allana Sons has its own shipping company called Phoenicia Shipping Company Private Limited. This shipping company is also the largest shareholder in Allana Sons. The company’s revenue growth has been phenomenal. Over the last decade, its turnover has grown 338 per cent.
While Allana Sons is the biggest of them all, there are other smaller players in the state who contribute to India’s growing beef exports. In Ghaziabad, where Allana Sons operates three abattoirs producing both buffalo and sheep meat, another company called Eagle Continental Foods Private Limited operates a slaughter house producing only buffalo meat. The family-run business managed by Haji Shahid Ali Qureshi has been as impressive in its revenue growth as some of the bigger players. In 2009-10, its turnover was around Rs six crore. In 2015-16, it touched Rs 520 crore.
The UP state government has supported some of these beef exporters by picking up stakes in them. A case in point is Hind Agro Industries Limited, another family-run enterprise managed by Sirajuddin Qureshi. Hind Agro runs a slaughter house licensed to produce only buffalo meat in Aligarh, a district which, along with Ghaziabad, has the largest concentration of abattoirs in the state. The company’s latest balance sheet filed in 2014-15 shows it achieved a turnover of Rs 723 crore while making a loss of around Rs one crore. A decade ago, its turnover was almost half the figure. A look at the companies’ shareholding pattern shows that a 13.66 per cent stake is held by two units under the UP government. As of March 2015, the Uttar Pradesh Pashudhan Udyog Nigam Limited (UPPUNL) held 4.41 per cent stake. The Pardeshiya Industrial & Investment Corporation of Uttar Pradesh (PICUP) held the rest. Owing to the government stake, bureaucrats from these state bodies also get representation on Hind Agro’s board of directors.
The importance of beef exports in the turnover of these companies is immense. For instance, Eagle Continental earned Rs 470 crore out if its Rs 520 crore revenues in 2015-16 through exports. In 2013-14, Hind Agro’s foreign exchange earnings were almost 60 per cent of its turnover though they fell significantly the next year.
The impressive growth in the turnover of India’s beef manufacturers runs parallel to the country’s beef export growth over the years. Among the top three beef exporters in the world -– Brazil, India and Australia -- it is India’s beef exports that have grown the fastest since 2012. While Brazil’s beef exports grew by 21 per cent, Australia’s exports contracted by almost 1.5 per cent. India’s beef exports meanwhile grew 31 per cent during the same period. Coincidentally, or otherwise the growth in the turnover of India’s beef manufacturers who do bulk of their slaughtering in UP, echoes India’s beef export growth story. If these three companies were taken as a case study, juxtaposing their turnover growth with India’s beef export growth would generate a similar graph (See graphic at the end).
India has upped the ante in the beef export market despite producing less than half of Brazil’s annual production. Although India was lagging behind Brazil in beef exports for long, it overtook the Latin American nation in 2014. The next year India again exported more beef than Brazil. In 2016, both countries were neck-to-neck exporting similar quantities of beef. The US Department of Agriculture (USDA) in its latest release predicts that Brazil would again overtake India by October 2017.
But with the Brazilian beef scandal hitting its beef industry hard, those predictions might have to be revised. But India too is in the midst of a volatile situation with the Yogi administration in UP cracking the whip on illegal slaughter houses. Reports suggest even the registered abattoirs are feeling jittery and the supply of buffaloes for slaughtering has dwindled across the state owing to the fear factor. Lions in zoos are being fed chicken, while mutton has replaced buffalo meat in food stalls across the state.
Though there is reason for optimism, this could also make the export driven companies in the state nervous at a time when the Brazilian crisis presents a tremendous business opportunity. China, which is Brazil’s biggest client, has put a blanket ban on Brazilian beef imports indefinitely. The European Union (EU), which has one of the strictest food safety standards in the world, has done the same. Brazil can’t sell its beef to the world anymore. It will take some time for the Brazilian beef export industry to recover from this body blow.
The reasons why India’s beef exporters should feel jittery in the midst of Yogi’s crackdown are also not hard to see. China, the world’s biggest consumer of beef doesn’t produce enough of it to meet its domestic demand. China’s domestic consumption was around 7.9 million tonnes while it produced around 6.95 million tonnes of beef. With Brazil barred from meeting this shortfall, this should ideally signal the advent of good times for India’s exporters. Yogi’s crackdown on beef in India’s largest beef manufacturing state meanwhile could be a spot of sunshine in the storm that has hit Brazilian beef manufacturers.
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