Trade cut likely to backfire on Jakarta

15 Jul, 2015 05:50 AM
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This new move will be still be doomed to failure as ordinary people eventually suffer from high meat

OPINION: INDONESIA'S self-sufficiency advocates may have arranged their latest tilt at stopping the cattle trade more carefully than in the past, but this new move will be still be doomed to failure as ordinary people eventually suffer from high meat prices.

Whereas the last blow-up over live cattle exports involved an arbitrary Australian ban by the Gillard government playing into emerging economic nationalism in Indonesia, this latest case seems to involve more intense economic nationalism surging ahead in Indonesia without the ballast of a close bilateral relationship to act as a restraint.

But the underlying push for beef self-sufficiency in the Indonesian agriculture ministry and various local administrations remains strong despite the best efforts of central economic officials, and has been receiving sympathy from President Joko Widodo, who has given on-again, off-again support to a range of protectionist measures.

In recent years efforts to cut the live import quota - including after the Gillard government ban - coincided with the peak demand period following the end of the Muslim fasting month.This time the 250,000-head second-quarter import quota will have provided plenty of fattened stock for the feasting due later this week so the third quarter quota reduction will only begin to have an impact after the peak demand is already over.

Ray Trewin, an expert on the cattle trade at the Australian National University, says the Indonesian industry is still fragmented despite all the efforts to build it up and the big risk is that the small cattle farmers respond to higher world meat prices by killing off their breeding herds, which will leave the country worse off in the long run.

He says Agriculture Minister Barnaby Joyce should have no problem finding new export markets for the now-surplus Australian cattle given the rise in world prices. Vietnam, where meat consumption per capita is already greater than Indonesia, would be an obvious nearby market to look.

"The Australian industry isn't going to hang around. When the Indonesians find they have to come back they will have to go to India."

The long-term reality is that Indonesia has to learn to focus on the beef-fattening part of an integrated food chain, and Australia needs to get foreign investment into an Asian-linked beef processing facility in the north to bring some greater stability into this topsy-turvy trade of recent years.

AFR
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READER COMMENTS

Chick Olsson
15/07/2015 6:48:55 AM

What a very very silly article by someone in ANU who has no idea how or why this trade works. Talking down to Indonesia will only make matters worse. Indonesia was humiliated by the Gillard Governments crazy decision to ban live ex, a situation that will take time to heal.
travelling wilberry
15/07/2015 7:48:33 AM

And the Indo abattoirs will still continue to kill cattle regardless of how many Aussie cattle are sent. So my question is… without the Aussie farmers paying to improve the conditions in these abattoirs, who will? Answer NO-ONE, certainly not the so called AW charities! So hooray for Aussie Live exports and the farmers of Australia, improving AW outcomes all over the world.
newbroom
15/07/2015 11:17:22 AM

this article rings true based on my on the ground person in Jakarta. Indonesians continue to mismanage and the new President has a very limited circle of supporters. All at sea it seems to me.
Ted O'Brien.
17/07/2015 10:19:03 AM

Marvellous how confused our modern education makes us. Do you think that just possibly, maybe, the Indonesians might be hoping for a price drop? What effect has this news had on cattle prices? Where are these surplus cattle that Barnaby Joyce must find a market for? The Indonesians probably have a better handle on the situation than the Australian commentators do.

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