A second visit by a senior Australian minister to Jakarta in just over a fortnight will again focus trade talks on calls for annual permit allocations for live cattle imports to Indonesia.
Indonesia currently issues cattle import permits at the start of each quarter, with exporters given no prior advice as to how many permits will be allocated.
The lack of notice makes it difficult for exporters to secure supply in advance, causing spikes in demand at the start of each quarter which adds to the cost of cattle and feeds through to higher beef prices for Indonesian customers.
Australian cattle export industry leaders say an annual permit allocation system would mutually benefit both Australia and Indonesia, because it would allow producers and exporters to plan ahead with more certainty and to match supply to Indonesia’s peak demand needs, and would remove unnecessary costs which would reduce beef prices for Indonesian customers.
Agriculture Minister Barnaby Joyce will spend the next three days visiting his ministerial counterparts and industry representatives from both countries in Jakarta, following similar talks involving Trade Minister Andrew Robb two weeks ago.
Mr Joyce told Beef Central before he flew out on Monday that he would be “politely asking for annual quotas”, but did not appear highly confident of that outcome.
“I don’t know what our prospects are like,” he said. “I’m hearing messages that I might be out of luck on this one.”
There has been some speculation at industry level that the Indonesian Government will not move to the release of annual quotas, but is considering announcing annual ‘indicative’ permit volumes before the start of each year, and then issuing permits for four-monthly periods three times a year.
However the Indonesian Government is yet to make a formal announcement on what its permit allocation plans for 2016 will be, and if any change to the existing system will occur at all.
Mr Joyce said he will be emphasising the benefits for both countries of having longer lead to times to plan the supply of cattle ahead.
Allocation permits annually would help to combat food inflation in Jakarta, he said.
“We do that if people have a clear line of sight to a large number of cattle over a 12 month period,” he said.
“That is why it is an advantage to them, otherwise people can just game the system and work on the principal that maybe the quotas will be cut and therefore the prices should go up, and the only person who pays for that is the lady on the street in Jakarta when she goes out to buy the groceries.”
While Australia is trying to convince Indonesia of the benefits of a stronger relationship between both countries and longer lead times in permit allocations, many Indonesian politicians have been stating that the country should be reducing its ties with Australia in favour of importing beef and cattle from other sources, including countries where Foot and Mouth Disease is present.
Mr Joyce said Indonesia should think carefully before potentially exposing its own cattle industry to stock from FMD affected areas.
“I can understand people’s concerns in wanting self-sufficiency, but be really careful about taking cattle in from a country that has Foot and Mouth Disease, because if you get it you will never get rid of it,” Mr Joyce said.
“And I don’t think Indonesian farmers are going to be very happy if you bring a new disease into the country.”
During his visit Mr Joyce will also meet with participants in the Northern Territory Cattlemen’s Association Australia-Indonesia Student Exchange Program, which he said had played a significant role in building strong relationships between the cattle industries in both countries.
“The more we have a bilateral understanding of each other, the better our trade will go,” he said.
“The more there is a clear understanding and transparency in our supply capacity and the people that we are dealing with and the more it is family to family relationships like the Indonesian families and Australian families the better it is for us.
“You want Government ultimately playing a minor role not a major role.
So the more you can create these connections the better it is for everybody involved.”