Suspension of cattle exports to Indonesia hurts Australia

Suspension of cattle exports to Indonesia hurts Australia David Farley ;  Managing Director of the Australian Agricultural Company, Australia’s Largest Beef Cattle Company

JAKARTA POST, 20 Desember 2012

Like any good neighbors, Australia and Indonesia are meant to look out for each other. But in the past two years our beef industries have witnessed a sad and rapid decline in our mutual trust and understanding.  Both Australian and Indonesian governments have made policy decisions that have damaged our long standing beef industry relationships and threatened the economic viability and future for both Australian and Indonesian beef producers.  In these past two years, more than two decades of close Australian assistance and aid to the Indonesian beef industry and millions of dollars in aid have been wasted by policy decisions in both nations. Australia’s short-sighted decision to ban live cattle exports to Indonesia because of media reports of  poor abattoir practices gave Indonesia the justification it needed to persist with its own restrictions on imports to push for self-sufficiency in beef production. Despite continuing Australian aid — which this year included a further A$20 million (US$21.04 million) for beef research under the Australian Centre for International Agricultural Research (ACIAR), relations have not improved.  It portends deep and troubling impacts on both countries’ beef industries in the next decade, unless addressed quickly. In its Asian Century white paper, the Australian government made much of the purported boom for Australian agriculture in feeding a growing middle class in Asia, yet its actions have undermined its own rhetoric about better engagement with our Asian neighbors.  Australian commentators described the live cattle export ban as one of the stupidest and worst decisions any Australian government has made. For cattle producers in Northern Australia the decision to temporarily suspend the entire live export trade to Indonesia last year not only cost millions of dollars but devastated the industry.  Workers and service industries and which depend on the beef trade — from helicopters and trucking companies to indigenous stockmen — lost jobs or closed down. A number of beef properties are now in receivership. Worse, the decision gave the Indonesian government an excuse to persist with its restrictions on Australian live cattle in its push for greater beef self-sufficiency. These imports are essential for Indonesia to build up the breeding stock it needs to become self-sufficient. The Indonesian government has an admirable goal of seeking to meet 90 percent of beef demand from its local herd by 2014 — but it is trying to force this goal by restricting imports from Australia.  A more measured policy would be to increase collaboration with the Australian beef industry to supply Indonesia with the cattle and technical expertise it needs. Indonesia’s other ambitious goal is to lift its annual beef consumption from 2 to 20 kilograms per person over the next 20 years. The two goals are all but mutually exclusive. Even if Indonesia sought to chase a more modest target of 3.5 kilograms per person over the next five years, it would still require a 6-million head increase in the local herd to over 20 million head of cattle. Indonesia cannot reach this figure through breeding alone. However the import restrictions have caused shortages of beef, which in turn has dramatically inflated food prices for Indonesia’s poorest and seen beef  prices more than double to Rp 100,000 (US$10.36) a kilogram in recent months. Not surprisingly, Indonesian farmers are cashing in on the high prices by selling off breeding cows. The reality is they have sacrificed long-term self-sufficiency by eating their future breeding capacity today.  The answer for Indonesia lies in the very country from which it is trying to restrict imports.  Northern Australian cattle offer much to Indonesian breeders. They are resilient and productive, calving every 14 months as opposed to 21 months in Indonesia. Adding these cattle to Indonesia’s breeding stock could improve this calving rate could be lifted to one calf every 16 months, increasing the number of cattle produced each year.  Similarly, improving average daily weight gains from the current 0.5 kilogram per day to nearer the 1.5 kilograms that can be achieved in Northern Australia through genetics and nutrition would greatly improve car case weights and meat yields from the Indonesian herd.  The ongoing provision of high quality, tropically-adapted and disease-free feeder and breeder cattle from Northern Australia to Indonesia is critical for helping them to reach self-sufficiency.  It’s also critical for the cattle industry in Northern Australia to continue its growth. Indonesia also runs the risk of dealing itself out of a long-term trading partner. Should another country, such as China, recapitalize the Australian beef industry, then Indonesia may have to look further afield for imports, with no guarantee as to price or that the cattle will be free from disease. These short-sighted actions of both countries in suspending live cattle exports and restricting imports — all in the name of domestic politics — have put both Indonesia’s long-term goals at risk, and put at risk the future success of the Australian cattle industry. The way out of this is clear, and simple. Better, more honest and open diplomacy at all levels can change this situation. Australia needs to work closely with the Indonesians to better understand the implications of their policy decisions and to help each other to find mutually beneficial solutions and achieve their goals. The beef industry is already trying to do this — politicians in both countries need to do the same. Having traveled to Indonesia on many occasions over the past two years and meeting with Indonesian ministers, politicians, industry representatives, importers, feed lotters and even ordinary farmers, I remain optimistic that together Australia and Indonesia can help find a way forward that can ensure a viable future for both beef industries. ●