The News
Friday 24 of May 2024

A Missed Opportunity

Meat,photo: Pixabay
Meat,photo: Pixabay
Demand for halal beef is expected to grow by about 7 percent annually for the next 10 years

So far this year, the Egyptian Embassy has presented three separate tenders to the Mexican Foreign Relations Secretariat (SRE) to purchase large quantities of halal meat.

The first tender was for 10,000 heads of cattle, the second tender was for 35,000 heads of cattle, and the third tender was for 200,000 heads of cattle.

To date, not one of those invites to bid — which would represent an opportunity to earn millions of dollars with a guaranteed market and set price — has received an affirmative response.

The reason for the ignored Egyptian tenders is three-fold.

To begin with, ranchers and slaughterhouses must make an initial financial investment in order to transform their traditional feedlot and packaging installations into halal-compliant facilities.

Halal meat must be raised, slaughtered and certified in accordance with strict Islamic dietary laws and requires Muslim butchers to oversee the process.

But it’s not like Mexico isn’t already producing and exporting halal meat.

Last year, with the help of the Egyptian Embassy, the Culiacán-based SuKarne consortium — which is responsible for about 75 percent of Mexico’s total annual exports of about 160,000 tons of meat, chicken and pork, worth $3.5 billion — gained halal certification and sold Egypt 1,200 tons of beef cuts.

SuKarne now has a ranch and slaughterhouse with three Egyptian-born Muslim butchers, all of whom have been halal-certified.

Expanding these existing feedlot and packing plant facilities to produce larger quantities of halal beef would not represent a major investment for SuKarne, and the company’s success could serve as a model for smaller Mexican producers.

As for the potential market, it’s vast.

There are 57 predominantly Muslim countries around the world, and about 65 percent of the halal meat and poultry they consume is imported.

According to a recent study by the Dinar Standard growth strategy research and advisory group, the international halal food and beverage market currently represents a $1.3 trillion-a-year industry, accounting for nearly 17 percent of the entire global food and beverage market.

By the year 2018, the market for halal foods will be worth $1.6 trillion.

Halal meat is an important component of this market, and demand for halal beef is expected to grow by about 7 percent annually for the next 10 years.

Indonesia, the largest halal food market, imports nearly $200 billion in beef each year, and Turkey, the second-largest market, imports $100 billion each year.

In other words, there is plenty of demand, and if Mexican producers are willing to make the initial investment to earn halal certification and expand their client portfolios, they could easily get a foot in the growing Middle Eastern and North African markets.

And as for the concern of distance and transport costs, the fact that some of the major suppliers of halal meat for the Muslim World are Argentina, Brazil, New Zealand and Australia pretty much negates any qualms about Mexican beef being able to compete based on geography.

The second reason there have not been any bids on the Egyptian tenders may be financial.

The Egyptian government is offering a maximum of $3,000 per ton, which is somewhat less than the price paid to SuKarne for the halal beef cuts it sold to Egypt last year.

But the big difference is the fact that first, the Egyptian government is purchasing whole heads, not cuts (which translates into less yield loss due to trimming and less expenditure for processing and packaging), and second, the government-guaranteed tenders would represent massive purchases that would more than make up for lower profit margins through economies of scale (the cheaper-by-the-dozen theory).

Rather than sporadically selling small quantities of halal beef at higher prices, bids on these tenders would open the door to a market of continuous large-scale demand for Mexican beef, and would certainly set a precedence for other Muslim countries to buy from Mexico.

The third reason Mexican ranchers have not responded to the Egyptian Embassy tenders is more allusive, but basically boils down to inertia.

Both the Mexican and Egyptian governments have tried to pave the way for Mexican halal beef to be sold in the Muslim World.

But unless private sector investors and producers are willing to take the steps needed to enter that market, it isn’t going to happen.

Currently, Mexico is the 10th-largest beef exporting country, and for now, about 90 percent of Mexican beef exports are sold to the United States (Mexico also exports beef to Japan, Canada, South Korea, Hong Kong, the Republic of the Congo, the Ivory Coast, Panama and Chile).

However, the bilateral relationship between Mexico and Washington is now rocky, and there is a very real possibility that new regulations and tariffs could be imposed in the near future on an array of Mexican products, including beef.

Meanwhile, the global demand for halal beef is expanding faster than for any other kind of meat, and Mexican producers continue to miss out on opportunities to get a share of that crucial market.

The unanswered Egyptian tenders are evidence of that.

Thérèse Margolis can be reached at [email protected].