Australian beef in Indonesia

February 2017, Ashlee McEvoy, ASAP/ASAS 2017 Communications Intern

In April 2016, Indonesian cattle importers were struggling with Australia’s record-high live export prices. Over an 18-month period, prices rose from $2.50 per kilogram to $3.90 per kilogram, and importers still had to pay over $4 per kilogram for delivery.

At the time, the wet market in Jakarta was around IDR115,000 ($11.40 AUD) per kilogram, but this price was not high enough for importers to make financial returns from the high Australian prices. The wet market meat prices were considered expensive when over IDR100,000 ($10.09 AUD) per kilogram, and due to this the Indonesian Government aimed to lower prices to around IDR85,000 ($8.57 AUD) per kilogram. If the prices were to rise at this stage, there was risk of customers stopping buying the product all together to find a cheaper protein source.

William Bulo from Juang Jaya Abdi Alam feedlot in Lampung was interviewed by ABC Rural and stated he paid more for Australian cattle than he could sell them for.

“In the first trimester, we purchased cattle to arrive in Indonesia in the price of $4.80-90 (per kilogram) Australian dollars. Then we have to sell here for a price of $4.10-20 (per kilogram).

Bulo does not think his operation is sustainable without rising meat prices in Indonesia.

“Even the price above IDR100,000 is still not enough to cover our expenses,” he states, “with the cattle prices from Australia currently, we have to sell as IDR130-140,000, then it becomes economical for us to do business.”

Dhimas Brahmantya from Widodo Makmur Perkasa feedlots, also interviewed by ABC Rural, stated that he had never paid prices for cattle like he had been this year.

“The price the government has already set is actually much lower than what our purchasing price is.”

 

By September 2016 it was indicated by the Indonesian government that it would issue permits allowing 700,000 head of cattle to be imported from Australia in 2017. It was also reported that Indonesia was planning to increase its supply of Indian buffalo meat to beat the rising beef prices.

Stuart Kemp from the Northern Territory Livestock Exporters Association said to ABC Rural that the 700,000 head was a good number and hopefully achievable. Kemp also mentioned that the sale of Indian buffalo meat was being watched closely by the industry and they would carefully assess how the meat may have an effect on the market.

 

By December 2016, fewer Australian cattle were being demanded as the imported buffalo takes a market share and the wet season approaches. The number of cattle that were exported out of the Darwin Port in 2016 had dropped almost 140,000 head according to the NT Department of Primary Industry. Stuart Kemp, the executive chief of Northern Territory Livestock Exporters Association (NTLEA) was interviewed by ABC Rural and mentioned that the arrival of Indian buffalo was begin to reflect on Australia by fewer cattle purchases.

“For a long time the Indonesian Government wanted a way to put some pressure on our end of the market,” he says. “Now they’ve got what looks to be a credible alternative to Australian beef, and it’s certainly having an impact on the market.”

 

As of February this year it has come to attention that the Indonesian Government has suspended the importation of Indian buffalo meat after a ruling by the nation’s Constitutional Court.

However the Indonesian cattle import industry have warned that this decision is still open for interpretation, so it is unclear if this suspension will withstand.

The decision of important Indian buffalo has had a significant impact on the Australian live cattle exports due to the lower prices for consumers.

Indonesian cattle breeders and veterinarians were unhappy with the import of Indian buffalo as the cattle were not coming from a foot-and-mouth disease free zone, therefore putting their own livestock and people at risk. Due to this risk a petition was put forward, and while the petition was rejected by the Constitutional Court, they emphasized that meat from countries prone to foot-and-mouth disease could only be imported if circumstances are that of an emergency.

Ross Ainsworth, a veterinarian, was interviewed by ABC Rural and believes that the ban will not last.

“The political leadership in Indonesia wants this Indian meat to be imported and they have the power to do whatever they want, so I suspect they will make it happen however it needs to occur,” he said.

“The Indonesian Government is interested in providing cheap meat for its population and I don’t blame them.”

Dr Ainsworth also believes that while there has been an immediate hold on the importation of the buffalo, there will be no instant influence on Australia’s live cattle trade. He also predicts that is the trade is to continue, he thinks it will have a dramatic effect on Australia as the importation has the potential to take up 50 per cent of the demands of meat imports.

“So if the demand for Australian cattle is halved and we were bringing in roughly 600,000 head before, it might go to something like 300,000 a year.”

Currently, due to numbers being down in northern Australia, this trade is currently not a huge problem, but defiantly has the potential to be.

For more information, please follow the following links:

ABC RURAL – April 2016 – Carl Curtain- High price of Australian beef squeezes profitability from Indonesian cattle importers and feedlots

ABC RURAL – September 2016 – Carl Curtain – Indonesia set to import 700,000 live cattle and extra Indian buffalo meat next year

ABC RURAL – October 2016 – Carl Curtain – Cheap frozen Indian buffalo meat undercuts Australian beef in Indonesia, with some consumers unaware of difference

ABC RURAL – December 2016 – Carl Curtain – Indonesian demand for Australian live cattle falls as buffalo meat and wet season arrive

ABC RURAL – February 2017 – Lydia Burton Indonesia suspends importation of Indian buffalo meat, but many believe ban will not last

Indonesia suspends buffalo meat imports, but unclear for how long

By James Nason, 09 February 2017

The Indonesian Government has suspended imports of Indian buffalo meat in the wake of a significant ruling by the nation’s Constitutional Court yesterday.

http://www.beefcentral.com/live-export/indonesia-suspends-buffalo-meat-imports-but-unclear-whether-halt-will-last/

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