Cautious approach to quota news

25 Jul, 2013 02:00 AM

THE WA live export industry is treating the latest import quota rumours to come out of Indonesia with caution but producers are hopeful there is some truth to the speculation.

Media reports coming out of Indonesia say that Indonesian Trade Minister Gita Wirjawan has said the country will remove import quotas for beef and live cattle in an attempt to stabilise domestic beef prices.

This latest speculation comes after new Federal Agriculture Minister Joel Fitzgibbon announced late last week that Indonesia had relaxed import conditions to allow a further 25,000 head of cattle to be exported from Australia over the next three months.

Importantly there will be no weight restriction on the cattle to be exported with Indonesia indicating that the animals should be ready for slaughter.

Under the reported plan that surfaced in the Indonesian media this week, Mr Wirjawan said the Indonesian Government would look at setting a parity price for beef as a benchmark and then assess the need for imports.

It is reported that meat and live imports would only be allowed should the domestic beef price rise by more than 15 per cent from the parity price.

"The price mechanism as a trigger to import or not to import is very important but we should first determine the parity price, which should match our aspiration to curb inflation and maintain price stability," Mr Wirjawan told a room full of reporters last Friday.

The ministry was working on the policy framework, which would be ready in the next two months, he added.

The move was aimed at maintaining domestic beef prices at between Rp 75,000 (AUD$8.06) and Rp 76,000 per kilogram.

That would be 20pc lower than the national average price of Rp 93,000 (AUD$10) per kilogram.

Indonesia is set for an election next year and food prices and the cost of living are expected to be major election issues.

If the announcement proves to be true, it would also mean the end of the Indonesian Government's push for self sufficiency by 2014.

As Farm Weekly went to press, the Australian live export industry was using a 'wait-and-see' approach to Indonesia's latest announcement.

Some exporters saw the news as a "positive" for the industry, but refrained from making a comment on the issue until a more 'official' announcement has been made.

Australian Live Exporters Council (ALEC) chief executive Alison Penfold said there was still a lot of speculation around the 25,000 head and the removal of the import quotas.

"Lets just catch our breathe," Ms Penfold said.

"We are still getting through the detail of the 25,000 and I wouldn't count our chickens before they hatch.

"There are a few people thinking out loud at the moment and that is great but we are just focused on getting cattle on board."

WA Live Exporters Association (WALEA) chairman John Edwards said live exporters and importers were still waiting on permits for the additional 25,000 head of cattle for Ramadan.

The Indonesian Government announced the extra 25,000 head would not be subject to the 350kg weight restriction either, meaning pastoralists now had an opportunity to get rid of some of their heavy cattle.

He said live exporters were still yet to commit to buying cattle or organising ships until they had permits in their hands.

"Heavier cattle are being filtered out all the time to markets in Vietnam, the Philippines and Malaysia, and a lot of people are not geared up to fattening cattle any more because of Indonesia's 350kg requirement," Mr Edwards said.

"So the cattle are just not waiting around windmills ready for mustering or sitting in an exporter's depot or in an on-station feedlot.

"We know that Indonesia wants an extra 25,000 head of slaughter cattle for Ramadan and we know they are talking about taking more numbers through to December but the information we have is that there is no movement on the feeder cattle quotas which relates to the 350kg restrictions.

"I think everybody has a head of steam up on this which is way over the top."

It is understood that one exporter has received permits, but that was yet to be confirmed.

"We expect the Minister to give us permits, we just don't know when," Mr Edwards said.

"So whether they surface tonight or tomorrow, who knows."

Wellard chief executive Mauro Balzarini said the company's Ocean Drover departed from Darwin on Tuesday with lighter steers sourced under the previous quota and weight limit restrictions.

"If the new permits are issued to our customers in time, the vessel will be able to return to Darwin to load heavier cattle, creating marketing opportunities for northern cattlemen and women and helping to alleviate the high beef prices for consumers in Indonesia," Mr Balzarini said. "The heavy cattle will be processed through Exporter Supply Chain Assurance System (ESCAS) accredited abattoirs in Indonesia, ensuring international animal welfare standards are achieved and exceeded."

Indonesia Institute chairman Ross Taylor said it was not surprising to see the reports in Indonesian press.

"The big news in Indonesia at the moment is that the Rupiah is falling in value because inflation is really spiking and there are just a whole lot of fiscal issues building up on them and the rising price of meat," Mr Taylor said.

"It is totally expected and you will definitely see an easing of the restrictions.

"And if Australia plays it well we can see the type of volumes going into Indonesia as in the past and not only going back to the levels it has been, but well above.

"But it will take some graciousness, some patience and some friendships on both sides."



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