January 3, 2014

 

Indonesia's 2014 beef self-sufficiency target unlikely to be met

The Indonesian government's decision to allow increased importation of cattle to meet growing demand points to the fact that the country's beef self-sufficiency target for 2014 is unlikely to be met.

 

The Trade Ministry has increased next year's annual imports by more than 50% to 750,000 head of cattle from this year's 478,000. Of the imports, 70% will be feedlot cattle and the remaining slaughter-ready cattle. The latter is usually imported ahead of festivities to suppress inflation as demand usually rises at these times.

 

Trade Ministry director general for foreign trade Bachrul Chairi said on Monday (Dec 30) that his office had issued import permits for 35 companies to import 130,245 head of feedlot cattle and 22,860 head of slaughter-ready cattle for the first quarter of 2014.

 

"This move is a declaration that the government has given up on the attempt to attain self-sufficiency," Cattle Breeders Association chairman Teguh Boediyana said, adding that it was clear that cattle imports were inevitable given the shrinking local cattle population.

 

The Central Statistics Agency's (BPS) newly published live breeding census shows that the country's cattle population is only 12.6 million head, or only 75% of 16.8 million head of cattle required by the Agriculture Ministry to attain self-sufficiency.

 

Teguh said the current population resembled the cattle figure back in 2009, before the five-year beef sufficiency programme kicked off, which underlined the government's lack of seriousness in trying to boost domestic supply.

 

According to Teguh, breeders are wary that another beef crisis will happen next year, resulting in sharp price increases. He said with Indonesia's shrinking cattle population and the weakening rupiah, the country would find it difficult to keep the price at the government's reference of IDR76,000 (US$6.22).

 

University of Lampung economist Bustanul Arifin predicted that beef prices would increase even when supply was adequate. Bustanul said the core problem lay in the supply chain rather than in the availability of beef stocks, of which the government had failed to manage. The flawed market was demonstrated in how beef prices remained high even after the government gave up imposing a beef import quota, he said.

 

He added, "Next year, we will probably see the price go even higher than this year, with our unaddressed market problems, a weakening currency and rising demand during Idul Fitri, which falls near the legislative and presidential elections mid next year."

 

This year, the government imposed an import quota of 80,000 tonnes of meat, comprising 267,000 head of cattle and 32,000 tonnes of frozen beef.

 

According to data from the trade and agriculture ministries, imports nearly doubled to 478,200 head of cattle and 55,800 tonnes of frozen beef as the government tried to address rising demand and push down inflation during major holidays.

 

Bustanul also stressed that the country's reliance on Australia as its main and only imported beef source could lead to price spikes, especially with ties between the two countries at a low after a spying row.

 

Trade Minister Gita Wirjawan said the government did not plan to stop importing cattle from Australia as it was needed to maintain the stability of the domestic meat market.