June 30, 2015

Austrex and Indonesian firms enter joint venture for meat processing company

Against the backdrop of Australia's interest to increase exports of breeder cattle to Indonesia, a $10 million deal for an end-to-end meat processing company had been signed between Aussie live cattle exporter, Austrex, and Indonesian companies, Pramana Agri Resources and Rumpinary Agro Industry.

The joint venture, to be based in South Sulawesi, Indonesia, will control the critical chain of production, from cattle sourced from Australia to the sales of packaged beef.

"The business model will be integrated, from the animal feed supply to the fattening, up to the meat cutting and the beef box processing," Robert Erizo Kusnadi, the director of Pramana Agri Resources, said.

According to Kusnadi, the initial feedlot capacity will hold 10,000 to 15,000 cattle.

While negotiations for control of the joint venture are still underway, Pramana Agri Resources and Rumpinary Agro Industry are likely to take a bigger share of the ownership, according to Jakarta Globe.

Operations are set to commence in the second quarter of 2017.

The development in South Sulawesi will be another boon for Indonesia which aspires to achieve self-sufficiency in its beef supply; by 2018, the country hopes to import two million head of breeder cattle, Willem Westra van Holthe, the Northern Territory Minister for Primary Industry, said although acknowledging the difficulty in reaching that number.

Australia's recent eagerness to raise deliveries of breeder cattle to Indonesia had been roused by the financial aid which the Indonesian government is rendering to its eastern provinces to help expand local beef herds.

According to van Holthe, the provincial authority of East Kalimantan plans to bring in 11,000 head of breeder cattle.