INDIA’S buffalo meat exports, the commodity beef product that sets the world price floor, are plunging as China cracks down on the grey trade in the wake of African Swine fever in pork.
That has seen average prices for the lower quality meat, a byproduct of India’s dairy industry, fall from a peak of US$3.18 a kilogram in July last year to $2.99 by the end of the year.
While the full implications of shifting global red meat dynamics as a result of this trend is yet to play out, the main implications for Australia will likely be in the live cattle business to Indonesia.
Here, Indian buffalo, or carabeef, is used to help position beef as an affordable protein.
Analysts say the impact in markets where Australia sends frozen manufacturing beef that also take significant quantities of carabeef, such as the Philippines and some Middle East and North African countries, will only be minor.
Carabeef is without foot and mouth disease free status and therefore does not have access to many of Australia’s high value markets such as Japan, Korea, the European Union and the United States.
In the markets where we both have access, Australian beef does not typically directly compete with carabeef, Meat and Livestock Australia experts said.
Indian buffalo exports are chiefly boneless frozen product that is used in processed foods, canned goods and sold in the low-end retail and foodservice sectors.
India has the world’s largest bovine population at an estimated 304 million head.
It’s carabeef has no official access to China, the world’s largest meat consumer, however it is believed to be smuggled in through neighbouring nations.
Rabobank’s China and South East Asia analysts note international reports of China clamping down on food smuggling.
That usually occurs around the New Year festivities but also now appears to be fuelled by the African Swine fever outbreaks, according to Rabobank.
MLA reports there have been significant shifts in India’s total buffalo export volume. It is down 8 per cent for the year ending November 2018 compared to 2017.
Exports to Vietnam, carabeef’s largest export destination, have dropped 16pc for this period, totalling 577,920 tonnes, compared to 686,765t for the previous year.
Additionally, buffalo exports to some other key destinations have also decreased – Thailand is down 50pc, Laos down 78pc and Hong Kong down 87pc, according to MLA.
In total, Indian buffalo exports are at their lowest levels since 2012.
Meanwhile, China has increased its official beef imports in recent years, granting more countries official access.
In 2018, total beef import volumes through China Customs were up 50pc on 2017, which in turn were up 20pc on 2016.
In 2016, ten countries exported beef to China via customs, which increased to 13 countries in 2017 and to 19 countries in 2018.
Where is Indian buffalo likely to flow without the China channel?
It’s sanitary status restricts access to many countries. It predominantly exports to developing and price sensitive markets, according to MLA.
There have been some markets experiencing increases, most notably Myanmar, Indonesia, Philippines, and the United Arab Emirates, Oman and Russia.