The first shipment of Indian buffalo meat for 2018 arrived prior to Ramadan and Idul Fitri, from May 15-June 16, in anticipation of increased demand over the religious festival period.
The Indonesian government said the new permits were part of its continued efforts to keep beef prices affordable.
Through distributors, it aims to increase the presence of Indian buffalo meat beyond Greater Jakarta, to wet market operations, BULOG retail shops and other sectors across the country.
The new permits went contrary to a previous Meat and Livestock Australia (MLA) report that said, “In mid-November (2017) the Indonesian government stated it does not intend to issue any additional Indian buffalo meat allocations beyond the 110,000 tonnes agreed at the December 2016 limited coordination meeting”.
The MLA 2017 market snapshot said that the entry of Indian buffalo meat into the Indonesian market in August 2016, combined with high Australian cattle prices and the Indonesian government policy to achieve self-sufficiency for major commodities including beef, affected Australian live cattle shipments in 2017.
“The entrance of Indian buffalo meat into the Indonesian market has also impacted Australian beef exports, with boxed beef shipments lower in 2017,” MLA said.
Cattle exports to Indonesia dropped 16 per cent, to 512,000 head, for the 12 months to the end of January, and boxed beef exports declined by 19pc over the same period, to 50,000 tonnes swt, with the trend set to continue.
In March 2018 MLA released details of Indonesia’s increased permits issued for Indian buffalo meat to provide affordable prices to consumers.
“If fully utilised, the permits reflect a further increase in competition in a market worth $1.09 billion in export receipts to the Australian cattle industry,” MLA said.
Indonesia is a key beef trading partner with Australia and is ideally located for the northern cattle export trade.
MLA said beef consumption in Indonesia was expected to increase by 160,000t carcase weight by 2021.
In 2017, Indonesia received 60pc of Australia’s live cattle exports, was the fifth largest beef export market and was the leading destination of beef offal exports.
MLA said the “fresh permits must be considered in context of an overall beef shortage in Indonesia, with the local cattle herd unable to meet demand in a country of 264 million people”.
“In the current market, the cost of cattle in Australia – due to an ongoing herd rebuild – is having a far greater impact on the live and boxed beef trade to Indonesia than additional Indian buffalo meat entering the market.”
Indonesia’s first series of permit allocations were for 110,000t of buffalo meat (for August 2016 to December 2017), which was almost double the volume of Australian beef exports to Indonesia in 2016, but only about 78pc of the permit allocation was realised.
MLA said the entry of Indian buffalo meat has made Indonesia an increasingly challenging market for Australian exports, alongside high cattle prices and increased regulatory complexity.
Indian buffalo meat undercuts imported and locally slaughtered beef and has penetrated wet markets in the Greater Jakarta region – where about 70pc of beef from Australia’s feeder cattle exports are ultimately consumed.
MLA said buffalo meat was a cheap and ideal substitute for beef in many Indonesian dishes, making it popular among small meat manufacturers and foodservice operators.
Indian buffalo meat attracts consumers and further processors, seeking the cheapest available product on the market and is often blended with fresh beef in wet markets to reduce overall purchase costs.
MLA said that while manufacturing beef and cattle exports to Indonesia have faced headwinds, some segments have shown growth.
“Boxed beef primal exports in 2017 lifted 35pc year-on-year, to 34,000t swt, underpinned by increased shipments of blade, brisket and outside,” MLA said.
“Further supported by the relaxation of cut restrictions and reduced slaughter of imported cattle (and decline in local offal production), offal exports to Indonesia lifted 44pc, to 26,000t swt in 2017.”
Despite the majority of the population being Hindu and vegetarian, India consumed more than 2.4 million tonnes (carcase weight) of beef and buffalo meat in 2017 – with more than 170 million beef consumers, mainly from among the Muslim and Christian population.
India is the world leader in beef and buffalo meat exports with more than 40pc of its total production shipped to south east Asia and the Middle East.
Vietnam takes 50pc of Indian exports and shipments to Iraq, Indonesia, Russia and Turkmenistan increased considerably in 2017.
India also has an 80pc share of the Malaysian market.