May 9, 2012

Indonesia faces meat supply crisis

Indonesia's reduced beef import quota is causing concerns for a looming meat supply crisis besides causing shock waves among meat importers and distributors.

Chairman of Meat Distributors Association (ADDI) Suhardjito warned that if Indonesia does not increase the quota, prices will shoot up. 'Average prices have gone up by 40% and they will continue to climb ahead of Lebaran," he told Tempo on May 6, 2012.

The reduced quota has not only pushed up the prices of both fresh and frozen meat, but is also affecting the meat processing industry. Currently, sausage and meatball and other meat processing businesses are being held hostage by rising raw material and operational costs.

ADDI's data shows that since March 2012, meatball raw material price has gone up from IDR39,000 (US$4.24) to IDR54,000 (US$5.88) per kilogramme, whereas the price of fatty meat for meatball is up from IDR42,000 (US$4.57) to IDR47,000 (US$5.11) per kilogramme. Previously retail businesses received 165,000 tonnes quota a month, which however now has been reduced to 30% by the reduced quota.

Chairman of Indonesian Meat Exporters Association Thomas Sembiring said that the remaining import quota for the second semester stands at 8,000 tonnes versus the normal 13,600 tonnes. "This week the importers and Government will meet to address this issue," he said.

The issue stemmed from the Agriculture Ministry's policy not to increase the import quota for cows and frozen beef this year. The Agriculture Minister Suswono said that Government would allow only 283,000 cows and 34,000 tonnes frozen beef this year, reduced from last year which saw the import of 600,000 cows and 90,000 tonnes frozen beef.

Suswono believes that the quota is sufficient to fulfil the domestic need including expected increased demand ahead of Hari Raya in the second semester. "Domestic supply is likely to make up the deficit,' he said during the press conference on May 1.