August 19, 2015
Cattle exporters warned that Australian beef would soon be exhausted completely in Indonesia in just six weeks.
The scenario echoes a concern raised by Mark Allison, the chief executive of one of Australia's biggest live cattle exporters, Elders, who said that Indonesia may not have adequate beef for local consumption in the current quarter.
With a larger permitted quota of cattle imports at present, Australian cattle producers could also face an uphill task in fulfilling Indonesia's demand, said Stuart Kemp, the chief executive of the Northern Territory Livestock Exporters Association.
He attributed the challenges to demand from other foreign markets during the first half of 2015, dry weather in Queensland and a lack of vessels to transport cattle.
"A lot of vessels have been contracted for the quarter and those contracts cannot be broken. It's going to be very hard to source the 50,000 head of cattle in the short-term," Kemp added.
The recent developments came after Indonesia's earlier import cap of 50,000 Australian live cattle backfired. The country now finds itself in an awkward position as it issued permits for another 50,000 animals to Bulog, its state procurement agency, in order to pacify higher meat prices and public discontent. This move, Tracey Hayes, the chief executive of Northern Territory Cattleman's Association, pointed out, demonstrates that annual quotas is a more appropriate manner of determining imports instead of a quarterly allocation system which Indonesia is currently employing.
"It would benefit all concerned for more organised continuity of supply," Kemp agreed.
In the meantime, several Indonesian feedlots were operating at less than 50% of occupancy. "They are on 120-day rations, and if they don't have any more cattle coming through, we will get to a situation where they will run out of Australian beef in the next four to six weeks," Kemp said.
Indonesia's reduced import quota of cattle from Australia is an effort geared towards self-sufficiency in the country. Unfortunately, this prompted beef prices to rise about one-third higher than Bulog's target price of US$6.50/kg, according to Djarot Kusumayakti, the agency's chief executive.
Kemp said that Australian cattle exporters had contributed towards Indonesia's self-sufficiency aspirations by assisting in domestic heifer production programmes and helping to "stabilise and build herds".
Moreover, the relationship between exporters and importers, "at an industry level", is rather amicable, Kemp noted.