Indonesian trade minister Rachmat Gobel’s decision, announced yesterday, to slash quotas for beef cattle imports from Australia to 50,000 for the third quarter of this year – down from 180,000 for the same period in 2014 – has left Australia without a buyer for much of its current herd.
Officials in Jakarta have reportedly denied that the cutback is due to diplomatic tension between the two countries in the wake of Indonesia’s execution of drug traffickers and Australia’s policy of turning back asylum boats. Gobel has said the number of cattle permits could potentially rise again if there is enough demand.
But Indonesia says its internal beef market is now saturated, after an intake of 250,000 head of Australian cattle in the second quarter of this year, as well as high levels of domestic production. That is on top of the 221,000 animals already imported from Australia between in the first quarter of 2015.
Indonesian consumers will not be quite so convinced, however: beef prices have already risen this year in response to shortages. The end of Ramadan this Saturday will produce a surge in demand (and price) as Muslims celebrate the Eid festival.
Indonesian farming, at a price
Indonesia’s drive for self-sufficiency is not limited to beef, but extends to staple products such as rice, and the effects go far beyond its import markets. Domestic production is focused on land-poor farmers with limited education keeping small numbers of cattle in makeshift housing. Rainforest destruction to clear land suitable for the growing of cattle feed is one of the only ways to expand production, with devastating effects on native flora and fauna, including the iconic orang utans.
Indonesia offers financial support to help cattle producers increase production, but this has not yet been enough for the country to become self-sufficient in beef. As a result deadlines to achieve this have had to be extended by the government.
Although these statistics show an increase in Australia’s cattle exports to Indonesia, the recent fluctuations in Indonesian quotas emphasise the volatility of the live export trade. This highlights the risk of concentrating Australian exports into a limited number of markets.
The Indonesian market too is changing, from a demand for fresh meat to one for refrigerated and vacuum-packed products. A key to this is the availability of refrigerators and supermarkets, with a majority of Indonesian households now having at least one refrigerator.
Meanwhile, northern Australia needs to reduce cattle numbers, amid a major drought affecting much of Queensland. As well as having a damaging effect on the livelihoods of the producers, a limited market risks the welfare of the cattle because producers are reluctant to buy feed supplements if the market is uncertain.
Some producers may get caught out if they cannot get cattle off their properties before the wet season begins in November, and may not be able to provide enough fodder. This will create welfare problems for cattle remaining on the property.
Alternative markets will be hard for exporters to find, as the cattle sent to Indonesia are young and destined to spend time in feedlots before slaughter. The low value of the Australian dollar has encouraged markets for beef cattle to grow in several other Southeast Asian countries, including Vietnam, Thailand, Philippines and Malaysia, but spare feedlot capacity will be hard to find.
Abandonment of Australia’s live export trade and a focus on exporting meat instead of cattle would benefit producers by stabilising the trade, with further benefits to the welfare of cattle that have to endure the live export process, as well as to Indonesia’s native forest flora and fauna.