Indonesia may soon lift its import quota volumes for cattle from Australia with the country's agriculture minister, Suswono, facing possible dismissal, said industry sources.

 

It is believed that President Susilo Bambang Yudhoyono was preparing for a cabinet reshuffle, with Suswono to be axed along with other senior ministers in the 34-member cabinet.

 

The Agriculture Minister's sacking may be linked to corruption allegations against an Indonesian official, over bribes paid to a private company to have beef import quotas influenced.

 

Indonesia's Corruption Eradication Commission has been looking into irregularities with beef importation management in the agricultural ministry.

 

Suswono is behind a policy to promote a beef self-sufficiency drive in Indonesia that'  has seen cattle import quotas from Australia dramatically slashed over the past two years.

 

However, the lack of cattle supply has also caused local beef prices to rise in Indonesia, fuelling another layer of political tension.

 

The 50% reduction has also been linked to the government's reaction to the Australia's snap suspension of the live cattle trade in June 2011.

 

Industry sources say Indonesia's beef self-sufficiency drive is impossible to achieve due to practical constraints such as land availability, with the policy expected to be revised after 'Indonesia's elections next year.

 

However, sources noted that Suswono's departure could make him a political fall guy for a failed agricultural policy and see cattle permit numbers increased in the third and fourth quarters of this year, boosting market prospects for struggling northern Australian beef-cattle producers.

 

Alison Penfold, Australian Livestock Exporters' Council chief executive officer, said that there are a number of sensible grounds for Indonesia to increase its cattle import permits numbers.

 

She added that exporters and producers have been rallying around these grounds for a long time, which are based on basic market and economic principles of supply and demand between the two countries.

 

"That's what exporters and producers have been focused on for some time," she said.

 

"We'll continue to work with Indonesia on their moves for beef self sufficiency while realising the full export potential for Australian livestock producers."

 

Penfold said that there had been no recent movement on Indonesia's 2013 beef import quota of 80,000 tonnes, announced late last year.

 

The quota equates to about 238,000 head of cattle and 32,000 tonnes of boxed beef to be exported from Australia.

 

In 2009, Indonesia's cattle import numbers hit a historic high of 750,000 which was followed by 520,000 in 2010.

 

Export numbers plunged significantly in 2011 after the federal government's snap suspension over concerns with animal welfare and slaughter conditions.

 

Indonesia's permits numbers dropped to 283,000 in 2012 down from 410,000 the year before.

 

Penfold believes there was still time for Indonesia to lift its import quotas for 2013, with 40% of the estimated annual target traditionally announced in the third and fourth quarters.

 

Other industry members have been saying that the Australia beef cattle industry may have to wait until after the Australian federal election this year, and an Indonesian election in 2014, for permit numbers to return to pre-ban levels.

 

Federal Trade Minister Craig Emerson has repeatedly dismissed concerns about trade fall-out from the government's ban on live cattle trade to Indonesia.

 

According to Emerson, Indonesian Trade Minister Gita Wirjawan has stated possible increases in the live cattle trade, as Indonesia increases its beef consumption from two kilogrammes to 20 kilogrammes per year, in the future.

 

He stated that for Indonesia to meet that tenfold increase in consumption, there will be increases in demand for Australian beef into Indonesia.

 

Northern Territory Cattleman's Association executive director, Luke Bowen, said that Australia could immediately supply 600,000 head of cattle into Indonesia yearly,  reflecting the market's continued strong demand for beef protein, while protecting its local herd.

 

Bowen added that ongoing political machinations were preventing Indonesia from lifting its import quota restrictions.

 

However, the situation is reaching breaking point in Indonesia, with local beef prices escalating and feedlots at 10% to 15% capacity heading into the busiest time of year for trading, around the Ramadan religious festival.

 

He said there was no question about Australia's export capacity and Indonesia's market demand - but lifting cattle import restrictions, "isn't going to happen at this stage".