New Delhi: It has been a testing time for dairy farmers, particularly in north India. Just when liquid milk prices were showing signs of stabilising after remaining subdued for the past few years, the dry buffalo rate, or the sale price of a buffalo that has stopped giving milk and is ready for slaughter, has dropped sharply.
According to trade sources, dry buffalo prices in North India are hovering at Rs 140 per kg, down 20% from Rs 170-180 per kg a year ago.
The size of a buffalo bought for slaughter ranges between 100 kg and 450 kg.
Cattle suppliers also have reduced their purchases from dairy owners as they are incurring losses in their businesses.
This has led to a piling up of inventory of non-milch buffaloes in dairy farms across the northern parts of the country.
“It (dry or non-milch buffalo) is like an old scooter for us. We either sell it at some profit or just let it go at scrap value. In these testing times, when fodder prices and labour costs are rising, who wouldn’t want a good price for an animal that does not have any economic significance for the farmer,” said Satpal Singh, a dairy farmer from Jewar in Uttar Pradesh. He said the drop in the sale price of buffaloes couldn’t have come at a worse time, as after many years milk procurement prices were showing signs of stabilising.
The procurement price of milk with 65% fat in Singh’s region was quoting at around Rs 42 per kilogram while last year the same was around Rs 39-40 per kilogram.
Dairy owners said a big reason for the fall in dry buffalo prices was a sharp fall in India’s bovine meat exports.
Unlike the cow, buffalo meat does not have any religious connotations and its slaughter and export are permitted under the law.
Home to one of the largest buffalo population, India exported the animal’s meat more and more over the years. The commodity is now the second-largest item of India’s total farm exports, after basmati rice. But it has steadily been losing ground the past few years.
From a high of $4.57 billion in 2014-15, buffalo meat exports in the 2018-19 financial year dropped to around $3.31 billion, down almost 27.6% in a spell of five years.
According to industry experts, Vietnam traditionally has been the largest market for Indian buffalo meat exports, accounting for over 50% of the total shipments from India.
Much of this was purchased for sale to China, which officially does not allow buffalo meat exports from India due to its stringent food safety norms. However, industry sources said ever since China prohibited the movement of buffalo meat from India through Vietnam, trade has virtually come to a standstill.
Data sourced from commerce ministry shows that between 2017-18 and 2018-19, buffalo meat exports to Vietnam dropped by a staggering 28%. This was after a 11% increase in meat exports to the same destination between 2016-17 to 2017-18.
“In the 2019-20 financial year, the first five months’ trends show that unless China removes restrictions on the movement of buffalo meat from Vietnam, India’s total meat exports could fall another 15%,” Fauzan Alavi, Director of Allanasons Private Ltd, India’s biggest buffalo meat exporters, told Business Standard.
Alavi said that if the Centre makes sincere efforts to convince China to allow direct buffalo meat exports without re-routing through Vietnam, there could be big boost to the trade as China is a huge market.
“We are perhaps among the very few industries that transfer more than 80% of the price of finished product directly to farmers and any drop in last-mile rates impacts the dairy industry,” Alavi said. He said raw material prices (dry buffalo rates for slaughter) will immediately pick up as soon as Vietnam starts importing in a big way from India for the Chinese market, as packaged meat being a highly perishable commodity, no exporter can store shipments for long.
Industry players have even approached the commerce ministry to find out ways through which it can convince China to start importing from India.
In the meantime, some exporters have also started scouting for newer destinations to compensate for the loss, but the volume is still small.
Data shows that in the first five months of 2019-20 financial year, Egypt, which did not figure among the top 10 destinations for buffalo meat export has emerged as the second biggest destination for the same.
Buffalo milk accounts for over 50% of India’s total annual milk production estimated to be around 176 million tonnes as on 2017-18.
Uttar Pradesh, along with Rajasthan, Punjab, Haryana and Andhra Pradesh are among the top five buffalo milk-producing states in India and also have the highest number of buffaloes.