May 8, 2023

 

Indonesia seeks alternative cattle suppliers, turns to Brazil for lower costs

 

Indonesia is seeking alternative cattle suppliers due to high prices for Australian cattle, and Brazil, the world's largest beef exporter, has promised to export live cattle at a lower cost, Financial Review reported.

 

Didiek Purwanto, chairman of the Indonesian Beef Farmers Joint Council, said all necessary regulations have been drafted, and the legal framework is nearly complete for importing cattle from Brazil.

 

For more than three decades, Australia has been the sole supplier of cattle to Indonesia, and the trade accounts for slightly more than half of Australia's live cattle exports, which totaled US$1.2 billion in 2021.

 

Mark Harvey-Sutton, chief executive officer of the Australian Livestock Exporters' Council, said the industry will rely on its reputation as a reliable supplier to withstand the new competitive threat.

 

He said Australia benefits from their proximity to Indonesia and the high quality of their product.

 

Indonesia's diversification plans accelerated in 2021, when prices for Australian cattle reached all-time highs as farmers kept stock on the farm to replenish numbers depleted during drought years.

 

Thousands of small farmers in Indonesia went bankrupt because they couldn't afford the high prices for feeder capital. The Indonesian industry petitioned the central government to allow foreign imports. Mexico was initially preferred, but Brazil was discovered to be more cost-effective.

 

Juan Permata Adoe, Kadin's vice-chairman of trade, said they used to import up to 600,000 cattle from Australia per year, but that has dropped to around 300,000, and the price is too high.

 

He said Brazilian cattle is cheaper despite being further way. Australia imports cost around US$3 per kilogramme, but from Brazil it will cost most likely between US$2.80 and US$2.70."

 

Brazil has recently expanded its beef trade in South-East Asia, shipping live cows to Vietnam and frozen beef to a variety of markets including Indonesia.

 

Previously, Indonesia's status as a foot and mouth disease-free country limited its trading partners to other FMD-free countries, such as Australia. However, an FMD outbreak in Indonesia last year changed that. Indonesia struggled to control the disease, which had a negative impact on the local economy.

 

Australian officials briefly suspended the live cattle export trade in 2011 due to concerns about animal mistreatment, mostly once the cattle arrived in Indonesia.

 

-      Financial Review