Farmers in the spotlight

An article titled "Want to Earn More than a Banker? Become a Farmer!" in last week's Time caught my attention. Written by Steve Gandel, the article highlights an agricultural revival in the US that hasn't occurred in decades. Gandel also notes that the upswing could create opportunities in developing markets overseas:

"The average American consumes about 250 lb. (113 kg) of meat a year. The average Indian eats less than 10 lb. (4.5 kg) a year. In China, it's more like 100 lb. (45 kg). Which means there's a lot of room for growth. Half of U.S. corn production goes to feed cattle, pigs and poultry, which drives up demand for grain."

While it's obvious the two most populous nations in the world could consume more American meat, India's "room for growth" might be a lot more complicated than it appears. 

Gandel definitely did more homework on this topic than I did, but having just visited India and seen first hand the eating habits in Bombay, I don't believe Indians will be consuming even 50 pounds of meat anytime soon.




The most obvious reason why India's a tough sell is that a large portion of the population is vegetarian (42 percent, according to the FAO). Religious and cultural tradition discourages the consumption of meat for many, which is still quite obvious even in the country's most progressive cities. This aversion to meat (particularly beef) is well established and accepted. American restaurants like McDonald's and Dominos recognize it and replace national icons like hamburgers, sausage and pepperoni on their Indian menus accordingly.

India's limited market is also well documented by the USDA. A 2002 Market Summary helps explain why American meat isn't in high demand. According to the report, most of India's 1 billion people have low incomes (Gandel does note that there is a fast-rising middle class), so domestic demand is still largely for cheap staples: rice, bread, peas, and lentils. Even non-vegetarians often eat meat only once or twice per week.

In addition, most restaurants still source their foods locally, and western grocery stores are not yet typical (though there are 5 Walmarts in the country), so the vast majority of consumers opt to buy food from local markets or vendors.

A more recent report confirms the trouble with India's opportunities for growth, as the USDA released a trade report in 2010 comparing China's market to India's, noting that "roughly 65 percent of [India's] population depends on agriculture for their livelihoods and agricultural imports are seen as providing unwanted competition." The report also notes that while China has opened its door to US agriculture, India protects its domestic agriculture by employing steep duties (50 percent on apples, for example) on agricultural imports and steep sanitary and phytosanitary barriers on US meat, poultry and dairy.

"Indian per capita consumption of beef, pork and poultry combined is less than 10 percent that of China," the report states. "Over the past decade Indian consumption increased only 1.6 kg/person, compared to 8.2 kg/person in China."

I agree with Gandel that India's economic growth and rising middle class create fantastic opportunities for US exports, but it doesn't significantly change the demand for US meat.