April 5, 2011
 

Indonesian beef processors to close due to low beef supplies

 

 

A significant number of meat processing companies will be compelled to shut down if beef supplies do not become better within the next two weeks, industry officials said.

 

"Half of our members have submitted notice to the association that they will stop production if there is no more imported beef," Haniwar Syarih, executive director of the National Meat Processors' Association (Nampa) said.

 

Nampa's membership includes 24 medium- to large-sized meat processing companies in Indonesia that employ around 8,000 workers.

 

The meat-processing industry has faced difficulties since the Ministry of Agriculture cut import quotas as part of its effort to reach beef self-sufficiency by 2014, with a goal of reducing imported beef to 10.4% of total consumption.

 

Beef import quotas were reduced to 50,000 tonnes this year, a sharp decrease from 120,000 tonnes in 2010.

 

Haniwar said Nampa's members require an average of 18,000 tonnes of meat per year. With shipments slowing and some being stopped, production becomes more reliant on each company's beef reserves. Based on his calculations, the stocks will run out within two weeks.

 

Nampa chairman, Donatus Hartono, said prices for beef had increased about 40% since the end of last year, from about IDR27,000-30,000/kg (US$3.11-3.46) to around IDR45,000/kg (US$5.19) now.

 

Haniwar said the combined sales of Nampa members were about IDR3 trillion (US$346 million) a year. Soaring beef prices could leave companies facing hundreds of millions of rupiah in losses, he said.

Thomas Sembiring, executive director of the Indonesian Meat Importers' Association (Aspidi), said about half of beef shipments goes to processing companies.

 

Donatus blamed a lack of planning and communication by the government about the self-sufficiency programme, saying the quota cut only created turmoil in the market because it was implemented without first securing the domestic beef supply.

 

Imported primary cuts such as tenderloin and sirloin might be expensive goods, he said, but secondary cuts can be purchased at lower prices. Slaughterhouses in Indonesia, however, do not pay attention to cutting methods, he continued, resulting in similar prices for primary and secondary cuts.

 

"Local secondary cuts can be 10-20% more expensive than the secondary cut of imported meat," Donatus said, adding that most meat processors use secondary cuts in their production.

 

In addition to Nampa, small businesses such as bakso vendors have been affected. On Thursday (Mar 31), hundreds of meatball soup sellers gathered in front of the House of Representatives to protest high beef prices.

 

Two importers filed suit against the Agriculture Quarantine Agency on Friday (Apr 1) for not releasing 25 containers of beef from Tanjung Priok port. Fifity-one such containers have been detained at the port since January, with government officials saying they lack valid import licenses.

 

According to the media, each container was worth up to IDR500 million (US$57,686). They argue the ministry is complicating and prolonging the licensing process, increasing costs for importers.