November 20, 2012

Indonesia's beef prices rise on limited supplies

Following the government's drive to boost self-sustainability by cutting imports, domestic beef prices have nearly doubled in some parts of Indonesia, as retailers struggle to find supplies.

To achieve its ambitious 2014 self-sufficiency target, Indonesia slashed its cattle and beef import quota for 2012 to stimulate domestic beef production.

A beef shortage in Java, including Indonesia's capital Jakarta, has led to prices rising from IDR65,000-70,000 (US$6.75-7.27) per kilogramme to as much as IDR105,000 (US$10.91) per kilogramme in recent weeks, said Deputy Trade Minister Bayu Krisnamurthi.

"I have checked some slaughter houses to find out why the flow of cattle to be slaughtered is declining," said Krisnamurthi. "It may be caused by our policy to reduce beef and live cattle import policy."

He said that there would be no increases in the annual import quota as domestic supplies would keep pace with demand within three weeks.

Krisnamurthi said that some butchers had stopped selling beef in protest at the shortage in supplies. Indonesia consumed about 430,000 tonnes of beef in 2011 and this is estimated to rise by about 13% this year, as both wealth and its population size increases.

The archipelago imports about 16% from Australia, New Zealand and Canada. In an effort to combat rising food prices earlier this year, Indonesia said it planned to expand the job of national rice procurement agency Bulog, to include other foods like beef.

Southeast Asia's largest economy issued import quotas for 90,000 tonnes of beef and 600,000 live cattle in 2011.