Article – Indonesia poised to run out of Aus beef

by 16 September 2015

17 August 2015
Jared Lynch
Queensland Country Life

INDONESIA is set to run out of Australian beef within six weeks, according to Australian cattle exporters who say Jakarta’s plan to combat rising meat prices and public protests has come too late.

Last week Indonesian authorities issued import permits to state procurement agency BULOG (the Indonesian Bureau of Logistics) for an extra 50,000 head of live cattle, which must be ready for slaughter.

This doubled the number of cattle it can buy from Australia and partially reversed the savage cut in permits for the September quarter, which shocked the market when it was announced last month.

But Northern Territory Livestock Exporters Association chief executive, Stuart Kemp, said Australian cattle producers would struggle to meet Indonesia’s new quota.

Mr Kemp said most slaughter cattle had been sent to other overseas markets in the first half of the year, and dry conditions in Queensland would make the extra 50,000 difficult to source.

“There are also very few vessels available to take them,” Mr Kemp said.

“A lot of vessels have been contracted for the quarter and those contracts cannot be broken. It’s going to be very hard to source the 50,000 head of cattle in the short-term”.

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

In an effort to improve self sufficiency, Indonesian authorities last month slashed the number of cattle imports from Australia this quarter to 50,000 – less than a fifth of what was allowed in the previous three months.

As a result, beef prices are about one-third higher than the BULOG’s target price of 90,000 rupiah ($8.78) per kilogram, the agency’s chief executive Djarot Kusumayakti said.

Several traditional markets across Java also reportedly refused to sell beef for four days last week in a protest against prices they said had risen to more than 120,000 rupiah ($11.71) per kilogram.

Mr Kemp said many Indonesian feedlots were running at less than 50 per cent occupancy.

“They are on 120-day rations and if they don’t have any more cattle coming through we will get to a situation where they will run out of Australian beef in the next four to six weeks,” he said.

Some feedlots are running closer to empty.

Northern Territory Cattleman’s Association chief executive Tracey Hayes visited Indonesia last week and said the Tum feedlot in Banten near Jakarta was running at 35 per cent occupancy.

Ms Hayes also said sourcing an additional 50,000 head of live cattle would be challenging and strengthened the case for Jakarta to shift to annual quotas, rather than a quarterly allocation system.

Mr Kemp agreed, saying such a shift would be a “win-win”. “It would benefit all concerned for more organised continuity of supply.”

Mr Kemp said Australian cattle exporters supported Indonesia’s push to become more self sufficient, saying they had helped with a number of domestic heifer production programs to “stabilise and build their herd”.

“Relationships take time to build but fortunately at an industry level the relationships between exporters and importers are very good”.

Last month, Mark Allison, the chief executive of one of Australia’s biggest live cattle exporters, Elders, said he “suspected” Indonesia may not have enough beef to feed the nation this quarter.

At the same time, he said: “In terms of self sufficiency, it seems of the numbers of their domestic cattle, that’s probably a few years away.”

Northern Territory Cattleman's Association chief executive Tracey Hayes at the Tum feedlot in Banten near Jakarta, which she says is about 35 per cent full. Photo: Supplied

Courtesy of Queensland Country Life

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