August 6, 2012

Indonesia may face beef shortage until year-end

As the business could face a beef shortage for the remainder of the year, the government's efforts for Indonesia to achieve beef self-sufficiency by 2014 may hurt the meat industry.

For the last three years, the government, through the Agriculture Ministry, has been trying to cut back on frozen beef imports -- designated solely for the meat processing industry and hotel, restaurant and catering businesses -- while at the same time it expects local breeders to increase productivity to meet the industry's needs.

This year, the ministry reduced the import quota to 34,000 tonnes, a 66% decrease from the previous year. The move has sparked protests from importers, producers and traders alike.

"In 2010, we imported 120,000 tonnes of frozen beef. A year later, the government lowered the quota to 100,000 tonnes. This year, the quota is set at 34,000 tonnes only. The reduction is too drastic," Indonesian Meat Importers Association (Aspidi) executive director Thomas Sembiring said.

"We agree with the government's policy to phase out beef imports, but wish it had applied the policy gradually," he added.

Indonesia imports frozen beef from Australia, New Zealand and the US. According to Aspidi, beef from Australia and New Zealand comprises 90% of imports, while beef from the US accounts for the remaining 10%.

The meat processing industry and the hotel, restaurant and catering businesses currently face a 46,000-tonne shortage because they require at least 80,000 tonnes of frozen beef this year, Aspidi estimates.

The situation in the next five months will be even more crucial because most of this year's quota was filled in the first half of 2012, Thomas said.

Data from the Agriculture Ministry shows that 25,700 tonnes of frozen beef, or 75.59% of the total import quota, was imported from January-June, leaving only 8,300 tonnes available to meet domestic demands for the rest of the year.

Deputy Agriculture Minister Rusman Heriawan said that finishing the bulk of the quota in the first half had been intentional because the government had expected local and imported calves to meet the demands in the second half. "We also imported 283,000 calves this year. They were fattened for the industry at various feedlots during the first half," he said. However, the calves are not ready for slaughter and the government has thereby been forced to import an additional 7,000 tonnes of frozen beef from Australia and New Zealand to supply the processing industry.