THE trade deal with Indonesia being back on track is excellent news for the red meat industry, which stands to reap big export benefits from more liberalised arrangements in a key market, not only for live cattle but for boxed beef and offal.
The removal of tariffs for sheepmeat and goatmeat is also expected to underpin export growth in these sectors.
With the Indonesia-Australia Comprehensive Economic Partnership Agreement now tipped to be signed before March, cattle industry representatives say it is a win-win for both countries.
The deal was struck last August but relations hit a snag later in the year with talk of Australia moving its Israel embassy to Jerusalem, which did not sit well with Indonesia’s large Muslim population.
With Australia now officially saying it would hold back on that move, the path was cleared for the deal which the beef industry says provides a framework for a more market-orientated import regime.
Cattle industry representatives on the Indonesia Australia Partnership on Food Security in the Red Meat and Cattle Sector, which has facilitated the spending of more than $17 million on projects in meat processing, breeding, logistics and skills development, said the fact 2019 was an election year for both countries should bode well for the signing to progress swiftly.
Consolidated Pastoral Company chief executive officer Troy Setter, who travels regularly to Indonesia where his company operates two cattle feedlots, said demand for Australian beef there was still relatively strong, despite the challenges of high cattle prices.
There had been some softening of demand compared to the back half of last year but that was not unusual for this time of year which is out of celebratory season, he said.
“We are seeing live cattle prices of $3.30/kg out of Darwin which are certainly challenging for some parts of the market in Indonesia but we are still selling close to historical volumes,” he said.
Indian buffalo was also having an impact, particularly with processed meat markets and in food service markets and it was coming into the wet market in areas, Mr Setter said.
“It’s low quality and low price and fits a segment of the market but it’s limited by demand not supply,” he said.
The trade deal with Indonesia was very significant for both beef importers and consumers in Indonesia and exporters in Australia, Mr Setter said.
The Indonesian beef market was valued at A$977 million in the last financial year, with Australian boxed beef and live cattle exports estimated to contribute approximately 35 per cent of Indonesia’s total beef consumption and account for more than 75pc of its total beef imports, according to Meat and Livestock Australia.
MLA says IA-CEPA will deliver:
- A zero in-quota tariff for 575,000 head of live male cattle, which will grow by 4pc a year over five years to 700,000 head. Import permits will be issued automatically on an annual basis and without seasonal restrictions – a welcome improvement on previous administrative procedures. A review of this trade will be conducted after five years to consider future increases in the quota.
- Liberalised access for female live cattle exported to Indonesia, with zero tariff on entry into force of the agreement and no quota or import permit restrictions.
- Immediate or gradual liberalisation of tariffs applicable to boxed beef and sheepmeat exports to Indonesia – whereby those tariff lines not already benefiting from zero tariffs secured under the ASEAN-Australia-New Zealand FTA will benefit from either a zero or 2.5pc tariff on entry into force, down from 5pc, with the tariffs being eliminated altogether over five years.
- Similar advantages will be extended to frozen offals.