Canberra, May 30 – One of the world’s biggest beef exporters is getting out of the market.
India, which accounted for 20 per cent of all the beef exported in the world last year, is dealing with tough new rules by the Government that ban the sale of cattle, including cows and buffaloes, for slaughter across the country.
The decision will have huge ramifications for beef markets around the world, including Australia.
“It’s pretty much a foregone conclusion that they’re going to push to ban the sale of any cattle for slaughter,” market analyst Matt Dalgleish, from commodities firm Mecardo, said.
“So they are only looking at allowing dairy cattle and cattle for farm use.”
The ban on the slaughter and sale of cattle in India has been described as a move by the Indian Government to appease Hindu conservatives.
Already in India, 18 states have banned the slaughter of cattle.
Three states require permits for the slaughter of cattle and seven states allow cattle to be killed.
The tough restrictions did not stop India being a major player in world beef markets — it was the second-largest exporter of beef last year, behind Brazil.
However, that will change if the Government implements a nationwide ban on the sale of cattle for slaughter.
“There is going to be some political blowback in India,” Mr Dalgliesh said.
“They’ve got some form in the sense that they went through some banking reforms recently with a lot of blowback and they held firm.”
The Indian cattle market is a $4 billion industry and the move will have major impacts on world beef markets.
Independent beef market analyst Simon Quilty believes Australia could benefit.
“Simply to remove 20 per cent [of export beef] from the market creates enormous shortages out there,” he said.
Mr Quilty thinks that will help the Australian beef market in an indirect way.
“It’s what we call displacement that’s critical here. That is, where India was exporting to, the chances are Brazil will end up exporting to those countries should India be no longer able to service them,” he said.
“Then in effect, Australia fills the Brazilian holes left out there.”
It will not just be beef that is hit by a cattle slaughter ban in India.
According to Mr Quilty, the leather trade in India accounts for 13 per cent of the world market.
Beef traders the world over are now desperately seeking more information on the ban before a fundamental shift in the world market takes hold.