Indonesia seeks new beef markets to end dependence on Australia

Indonesia is considering diversifying its sources of beef. Photo: Glenn Campbell

Indonesia is expected to allocate permits for another 200,000 to 300,000 live cattle from Australia this year but warns it plans to import beef from other countries to end the virtual monopoly.

Acting director-general for international trade Karyanto Suprih​ told Fairfax Media Indonesia was considering importing live cattle and boxed beef from other countries such as India and the Philippines to reduce its dependence on Australia.

Australia is the only country to export live slaughter and feeder cattle to Indonesia and is the dominant boxed beef supplier with about 80 per cent market share.

However Indonesia already sources beef from foot-and-mouth-disease free countries such as the USA, Canada and New Zealand. 

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"All this time we have been always importing from Australia but recently we have been thinking of having more suppliers," Mr Karyanto said.

"Limited options will only lead to greater dependence."

Australia, the world's third-largest beef exporter, supplied about 40 per cent of the beef consumed in Indonesia last year.

However, Indonesia shocked the Australian beef industry when it slashed the number of live cattle imports to 50,000 in the third quarter of 2015 in an attempt to move towards self-sufficiency.

The drastic cut – down from 250,000 in the previous quarter – led to soaring beef prices and butchers in Jakarta and Bandung walking off the job in protest.

Although the start of the fourth quarter is just two weeks away, the import permit allocation is still unknown, creating an agony of uncertainty for exporters who are forced to take a gamble on how many cattle they should buy.

The radical cut last quarter left farmers in the Northern Territory scrambling to find other markets for about 150,000 cattle.

Mr Karyanto said Indonesia expected to import 200,000 to 300,000 cattle in the fourth quarter but the final figure would be decided by a meeting held by the Co-ordinating Ministry for the Economy "in the near future".

The cattle would come from Australia because they were free of foot and mouth disease "but in the future we will plan to import from other areas", he said.

Agriculture Minister Barnaby Joyce and the Australian Livestock Exporters' Council have called for an annual permit allocation system to end the uncertainty for exporters.

Trade Minister Andrew Robb, who is scheduled to meet the new Indonesian Trade Minister Thomas Lembong​ in Jakarta on Monday, plans to discuss the live cattle trade.

‎Australian Livestock Exporters' Council chief executive officer Alison Penfold said Australia had a competitive advantage because it was only five days by boat and seven hours by plane from Indonesia.

Australia provided high-quality, disease-free cattle that were fattened in feedlots in Indonesia, which also supported the local economy, she said.

"Buying product from other markets is not the answer to securing Indonesia's food security," Ms Penfold said.

"They have right on their doorstep the best partner in beef food security they could ever have."

Tracey Hayes, chief executive of the Northern Territory Cattlemen's Association, said she was aware of discussions around Indonesia importing products from other countries but they were in the early stages.

"Our position is always that competition is healthy providing it's a level playing field and import regulations are consistent across importing countries," she said.

International relations expert Pierre Marthinus​ recently called for Indonesia to phase out its dependence on Australian beef and wheat in favour of alternative trading partners such as India that offer additional strategic benefits.

"Jakarta's growing reluctance to steadily continue – let alone expand – its trade with Canberra is the result of numerous precedents of perceived Australian unfairness towards Indonesia," Mr Marthinus, from the not-for-profit Marthinus Academy, wrote in the Jakarta Post last month.

These included the 2011 live cattle export ban ahead of Ramadan following the release of footage of cattle being mistreated in Indonesian abattoirs.

He said Australia's "abuse of 'boycott' rhetoric" before the executions of Bali nine organisers, Andrew Chan and Myuran Sukumaran, the postponement of Mr Robb's trade delegation in March and the recalling of the Australian ambassador and temporary halting of ministerial contact had further damaged confidence within Indonesian business circles and importers.

"Dependence on Australian live cattle, boxed beef and wheat imports greatly undermines Indonesia's food security. Bilateral trade in this area rests on a fragile foundation," Mr Marthinus said.

With Karuni Rompies

An earlier version of this story said Indonesia would also allocate permits to New Zealand to import live cattle into Indonesia. New Zealand does not export live slaughter cattle to Indonesia. 

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Source: Indonesia seeks new beef markets to end dependence on Australia