APSN Banner

Record live export cattle prices putting pressure on Indonesia ahead of Ramadan

Source
ABC News - March 14, 2021

Matt Brann – There have been all kinds of records broken in Australia's beef industry this year, including the price for cattle getting exported to Indonesia.

Feeder steers exported via Darwin Port have been fetching about $4.30 a kilogram this month, up 65 per cent on where the price was in April last year.

That's great news for northern Australia's cattle producers, but what does it mean for Australia's biggest live cattle customer?

Indonesia has the world's largest Muslim population and is one month away from Ramadan, which will be followed by Eid al-Fitr, when demand for fresh Australian beef reaches its peak.

The record-high cattle prices have been unpalatable for many Indonesian feedlots and meat traders, triggering a number of decisions from the Indonesian government to keep prices under control.

Meat traders in Jakarta went on strike earlier this year in protest over their inability to lift prices above the government's set price for beef.

The price of Australian cattle has increased further since those protests and according to local media about "40 per cent of meat traders in [the wet markets of] Jakarta, Depok, Tangerang and Bekasi have gone bankrupt".

Brooke Barkla, from Sumatra-based feedlot company JJAA, said high live export prices were squeezing margins for everyone involved in the supply chain.

"The reason why we've seen $4.30/kg is due to lack of supply, a smaller herd [in northern Australia]," she said.

"This has significantly impacted the Indonesian importers, meat traders in Indonesia, as well as Australian live export companies.

"The [high] Australian dollar is also a big factor right now... and there's pressure from the Indonesian Government on the sale price, which is definitely squeezing margins."

The Indonesian government has issued import permits for 100,000 tonnes of beef and buffalo meat in anticipation of the "rising demand for meat during Ramadan and Eid this year", according to Kontan.com.

The volume of imports includes 80,000 tonnes of buffalo meat from India and 20,000 tonnes of beef from Brazil.

One local source told ABC Rural the import permits had potentially been issued too late.

"I think this year will be chaotic, with supply from feedlots tough, prices high, plus Indian buffalo meat running late into the market," they said.

"In my opinion, the feedlots in Indonesia will keep hold of a lot of cattle until the market can accept their [higher] price, so for Ramadan and Eid this year, supply from feedlots will be tough."

Ms Barkla said many Indonesian feedlots were short on livestock and that some "hadn't imported cattle for quite some time".

She said she was not surprised the government was looking at other options ahead of Ramadan.

"Demand will far exceed supply, given the capacity at the moment in feedlots, and the gap will be made up from the sale of local cattle [and imports]," Ms Barkla said.

She said cattle prices were expected to ease when northern Australia's mustering season started in a few months.

"We'll see what happens during the dry season [in northern Australia], but potentially Indonesia will look to get cattle from somewhere else if it does stay at that price," Ms Barkla said.

"In the short-term, [Mexico] looks to be a viable option for them, but there's currently some challenges with ports, registered premises and licensing.

"At the moment we're at the highest pricing season, so we'll see what happens in the next few months."

Source: https://www.abc.net.au/news/rural/2021-03-14/record-live-export-prices-puts-pressure-on-indonesia-at-ramadan/1323698

Country