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Cattle industry hit by Indonesian decision to cut beef imports
Posted by Labels: Bans and Sanctions, Beef, Cattle and Livestock, Export, Indonesia, Meat, New Zealand and AustraliaLive exporters are trying to get more detail about the Indonesian Government's decision to drastically cut the amount of beef it imports from Australia next year.
(ABC News) The Indonesian Agriculture Minister has confirmed that Indonesia will cut beef imports. Live cattle imports will be reduced to 280,000 head next year (back from 520,000).
The country will also cut boxed beef imports to 34,000 tonnes from all countries, where last year it took 48,000 tonnes from Australia alone.
The plan is to phase out beef imports completely within three or four years.
CEO of the Live Exporters Council, Lach McKinnon, says that's a massive reduction and it would be a big blow to the northern Australian cattle industry.
"It's definitely come as a shock in regards to the number and the dramatic cut in the number," he said.
'It'll put us under a lot of pressure and we'll have to work very hard to get through this, but as I said, we still yet to find out the details."
The Cattle Council of Australia says the cuts to live cattle and boxed beef imports into Indonesia are sooner and deeper than it expected.
The country will also cut boxed beef imports to 34,000 tonnes from all countries, where last year it took 48,000 tonnes from Australia alone.
David Inall, from the Cattle Council, says the live import quotas from Indonesia are imminent.
"The Indonesian Government issues permits on a quarterly basis.
"And that's typically done a couple of weeks before the start of that quarter, so that's essentially now.
"I can only assume that the Indonesian Government will issue one quarter of that 280,000 permit allocation any day soon."
The Indonesian Government has been working towards self sufficiency of its food supplies.
It recently carried out a cow and bull census to establish how many cattle the country has and to work towards self-sufficiency by 2014.
While industry says that a change to quotas was expected, it maintains that the overnight cuts are much bigger than expected.
One of the major live cattle exporters, agribusiness company Elders, says this Indonesian decision to cut imports is no surprise.
He says Indonesia has been clearly stating its move to self sufficiency in food for some years.
Malcolm Jackman, chief executive officer of Elders, says his company earns $120 million from the trade overall, and those forecasts won't change.
He says smaller companies will be worse affected.
"So far the number of supply chains that have been audited and put in place is a relatively modest number and that's been done by the larger players in the live export industry.
"So you'll see some of the smaller players may not go into it any further."
Elders has previously told the stock exchange that the Australian decision to suspend the live export trade to Indonesia has cost its business approximately $7 million this year.
The Northern Territory Cattlemen's Association is warning northern producers not to panic, as the number of exports permits may well be revised next year.
President Rohan Sullivan says Indonesia would struggle without the live trade with Australia, as it heavily relies on it as a source of food and employment.
"There's a lot of politics in Indonesia around self-sufficiency and whether they can achieve that self-sufficiency remains to be seen. But at this stage I think we just try and work our way through this latest development."
Australia's largest meat trader says Indonesia has cut back on boxed beef imports by over 60 per cent.
Sanger Australia says permits for only only 34,000 tonnes of beef will be released to Australia and New Zealand next year, back from 90,000 tonnes.
Director Stewart Hanna says Indonesia is the company's fifth biggest market and the cuts are significant.
"It'll certainly impact the supplies that we deal with in the market," he said.
"To a certain extent it already has been.
"The issue of permits in the second half of this year has been hard to judge, I suppose, for our customers in Indonesia, and by the look of this, that's set to continue.
"I understand the importing council up there have an urgent meeting today to discuss all of this."
In Queensland, the broadacre lobby group AgForce says Indonesia's decision will mean up to 50,000 head from the north-west will need to go to another market.
Spokesman Grant Maudsley says producers will have to weigh up options, including possible new markets overseas for both cattle and chilled beef, but he also admits more cattle could end up on the domestic market.
Peak marketing body, Meat and Livestock Australia, has defended recent optimistic predictions that boxed beef imports would increase to Indonesia next year.
Aaron Iori, regional manager with MLA in Asia, says he was shocked with the suddenness of this announcement, as he relied on Indonesian importers for information.
"Our information largely comes from the commercial trade who were just as shocked as we were about the reduction in quota."
Meanwhile, a livestock agent in north-west Queensland says recent rain in the area will mean the industry will prosper in the short term, despite Indonesia's decision to cut the amount of cattle it sources from the region.
But Luke Westaway, from TopX Livestock Agents in Richmond, says cattle producers are already doing it tough.
"It's going to be a blow in confidence in the whole industry," he said.
"The biggest problem I see is that we're already coming off the back of a lot of concern in the industry with access to the markets and finding alternatives to live export markets."
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