March 5, 2010

Australia sees growing importance of Indonesian beef market

Indonesia is seen as an increasingly important market for Australian beef and live cattle trade, according to forecasts from Abare.

Northern Australia will reap the benefits of this growing Asian market, provided that producers can fend off looming competition from South America.

Abare predicts Australia's beef exports to Indonesia are forecast to increase by 16% to 44 kilotonnes in 2009-10, thanks to a booming Indonesian appetite.

Australia's high exchange rate could temper growth but the growing Indonesian demand would ensure the Asian country to continue being one of Australia's most attractive markets in the medium-to-long term.

Indonesian imports of live cattle from Australia increased by 28% to 700,000 head in 2008-09 with import demand growing well after an expansion of Indonesia's feedlot infrastructure. Australian exports of live cattle to Indonesia are forecast to increase by 5% to 735,000 in 2009-10, and a further 2% to 750,000 in 2010-11.

However, Abare warned of increased competition from Brazilian beef. In early September 2009, Indonesia issued a ministerial decree allowing imports of boneless beef from Brazil.

The effect on Australian beef exports will depend on a number of factors such as price and consumer preferences. While Australia has a freight advantage, Brazil is a lower cost producer, said Abare.

The integration of Australia's live cattle trade into Indonesia's beef supply chain through feedlots, however, could give Australia an advantage.