Daniel Fitzgerald – The Indonesian Government is reportedly looking to Mexico as an alternate source of live cattle, after Australian cattle hit record prices and Jakarta meat sellers go on strike.
In Indonesia, the government sets a ceiling for beef prices, as part of an effort to keep costs down for food staples.
But as the low Australian cattle herd and high demand from Indonesia combined to drive up prices to record levels over the last few months, meat sellers have been unable to lift their prices to cover costs.
So, for three days last week, meat sellers kept their stalls in Jakarta's wet markets empty to protest their inability to lift prices higher than the government-mandated limit.
Indonesian cattle industry consultant Robi Agustiar, said Indonesia's feedlots were struggling.
"At the moment, feedlot prices are 48,000 rupiah per kilogram but [the feedlots] have bought cattle from Australia for 56,000 rupiah," he said. "So they are losing money."
Indonesian Feedlot Association chairman Didiek Purwanto said Indonesian feedlots were at around 40 per cent capacity.
"Since the last quarter, feedlots have only tried to survive so they can keep their customers – not thinking about profit, with the hope that in the future, if conditions improve, their customers will remain and they can continue operations, Mr Purwanto said.
"However, the price of live cattle from Australia has [now] reached a [level] that is no longer possible for the feedlots to continue their operations.
"This also makes the Indonesian Government pay attention and ask the feedlots to look for alternative sources of cattle because Australia is increasingly unable to provide certainty of supply.
"This condition is very unfortunate, and the beef cattle industry relationship that has existed for 30 years between Indonesia and Australia is in danger of being destroyed."
Since November 2020, feeder steers to Indonesia ex-Darwin have been selling for around $4 per kilogram, with select lines of cattle sold for up to $4.10 per kilogram.
So far, the Indonesian Government has refused to raise its ceiling on beef prices, instead turning to other sources of protein.
The Government has reportedly increased its quota of frozen Indian buffalo meat to be imported and, according to local media, started to set up protocols to import cattle from Mexico by late February.
Mr Agustiar said it was unclear how many Mexican cattle the Government would allow to be shipped on the one-month journey to Indonesia.
"They have not set a policy yet, they are just trying to find another source of live cattle from another country other than Australia," he said.
But Australian Livestock Exporter's Council's CEO Mark Harvey-Sutton said he was yet to receive any official word from the Indonesian Government about permits being issued for Mexican cattle.
"We understand it is potentially on the cards, and it is a situation we are monitoring very closely, but from what I understand this is being driven by high prices in Indonesia at the moment," Mr Harvey-Sutton said.
"What we need to remember is that this is a rare window where Mexican cattle could be competitive with Australian cattle, and that is because of the high prices we are experiencing.
"At the end of the day, these are market forces and we need to work hard to ensure this is communicated. And we are respecting and honouring the partnership we have with Indonesia."
Mr Harvey-Sutton said exporters were still receiving orders from Indonesia, despite the tough conditions.
"From what exporters tell me those orders are still coming through because, at the end of the day, there is still that demand. Yes, it is a challenging market but those needs still exist and as far as our members are concerned it's business as usual."