Shafeeq Rahman examines why India’s meat processing sector needs more investment
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FOOD PROCESSING — an emerging industry in India that has gained prominence in recent years — has become the fastest growing sub sector within the manufacturing industry. Being an agrarian economy, India has abundance of raw material in terms of agricultural crop production capacities and livestock resources, which are considered basic inputs for the process industry. India ranks among the top 10 countries in the world in major crop production and animal stock. Several government policies are in place to help the processing of agricultural commodities. However, the processing of animal products is yet to get government support. This segment of the industry still remains highly unexplored, except for dairy products.
Livestock production comprises milk, meat, wool, dung, eggs and honey, mainly confined to unorganised sector but even then it plays an important role in the Indian economy. It has more than 25 per cent contribution in overall output of the agriculture sector as the total output stands at Rs 3,40,473 crore. Currently, the total contribution of the meat industry in agriculture is five per cent. A major share of meat output comes from poultry with Rs 24,759 crore, followed by mutton with Rs 21,787 crore and beef with Rs 6,276 crore for the 2009-10 fiscal.
Maharashtra, Andhra Pradesh, Uttar Pradesh, Bihar, West Bengal, Karnataka, Rajasthan and Punjab are major meat-producing states. Meat in India is generally produced by small butchers individually streetside and sold in retail shops. Consumers prefer to purchase in the wet market to ensure the hygiene of meat because they are not certain about the quality of processed and packaged food.
There are also big players such as Allansons,Venky’s, Hind Agro, Al Kabeer, Godrej Agrovet, Alchemist, etc., in the sector. But only about 6 per cent of poultry and 20 per cent of beef is converted into value-added products like sausages, hamburger, luncheon meat, kababs, meatballs etc., while in developed countries, the processing rate is 60-70 per cent of overall production. There were only 90 registered factories with the total output value of Rs 661,166 lakh in India that were dealing in processing and preserving meat in the 2008-09 fiscal.
Mutton and lamb too form a relatively small segment, where demand is outstripping supply due to high prices in the domestic market. Meat products are consumed more in urban areas. Consumption trends show that the percentage of amount spent on meat, egg and fish products from the total spending on food has increased from six to seven per cent in urban areas. However, rural areas are also witnessing a substantial shift in taste with the consumption of meat products rising from 4 to 7 per cent.
Preferable meat products in rural areas are chicken, which rose 29 per cent in terms of sales, mutton was up by 14 per cent, beef by 6 per cent and pork two per cent. In urban areas, the consumption of chicken has increased 34 per cent, mutton rose 21 per cent, beef six and pork 0.6 per cent. Indian consumers prefer fresh meat rather than processed or frozen meat. Processing of meat is exclusively for export purposes. However, the growing trend of urbanisation and opening of multinational fast food outlets such as McDonald’s, KFC, Domino’s, Pizza Hut, etc. have a significant impact on the domestic demand of processed meat. The government regulates the meat industry to safeguard consumer interest under the Food Safety and Standards Act 2006 and Meat Food Products Order, 1973. However, the government is considering an integrated policy for livestock products.
MEAT INDUSTRY is a lucrative business in recent years due to increasing demand in domestic and overseas markets, especially from beef from the Gulf and South Eastern countries. Adhering to the halal method in slaughter of animals is an important issue for consumers from the Muslim world. Therefore, prior to granting the registration certificate to abattoirs and meat processing plants, it is mandatory to disclose the method of slaughtering. India becomes a major producing and exporting country of bovine meat in the world. The government has set up a National Meat & Poultry Processing Board to oversee the growth of the meat and poultry sector in the country.
In spite of having large stock of animals and meat production capacities, processing is slow in India due to inadequate infrastructure. Meat processing is an untapped industry having huge scope for investments. The government has allowed 100 per cent fdi in the processing industry and has recently started the public-private partnership scheme for modernisation of slaughter houses. To conclude, things are improving but they need to be at a faster pace.
Posted on 23 January 2012 in Tehelka
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