Will Australia’s cattle and beef trade with Indonesia be impacted by the latest sudden breakdown in relations over spying allegations?

No one yet knows the answer to that question but sources close to the trade say there is clearly potential for the trade to experience collateral damage if the breakdown in diplomatic relations deepens.

“We would hope there would not be (ramifications for the trade) but the reality is that it is always possible that these things can have reverberations,” Northern Territory Cattlemen’s Association chief executive officer Luke Bowen told Beef Central.

“It is a very sensitive time in Indonesia because they are leading up to their own elections, and these sorts of issues can become even more sensitive than they would have otherwise been in this sort of climate.

“You can always look at these things in reverse and in the context of how we might react to the same sorts of revelations, so I think we have to put it into context to understand how the Indonesians might feel about it.

“We would hope that it doesn’t impact on our trade relationship, but if it is allowed to fester, and if it is not dealt with, there could be some collateral damage, which we hope won’t happen.”

Ross Taylor, the president of the Western Australian based Indonesia-Australia Institute, said he believed that in the longer term the spying issue will not affect business between the two countries, including the beef and cattle trade that is only just returning to its feet after the last major diplomatic rift over animal welfare two and a half years ago.

In the near future however, with a ‘very robust’ election process now underway in Indonesia, Mr Taylor said some short-term upheaval was likely as political candidates seized the opportunity created by the scandal to criticise “the big neighbour to the south who has been sticking its nose into Indonesia's affairs".

“In the short term it will get a bit bumpy on all segments of our relationship as Indonesians treat their sovereignty very jealously; remembering that they were occupied by the Dutch, British and Japanese for a total exceeding 350 years,” Mr Taylor said.

Several sources close to the trade both within Australia and Indonesia have privately told Beef Central they believe significant potential exists for the anti-Australian sentiment and hostility whipped up over the spying issue to spill over into the trade.

One who asked not to be named said Indonesians felt particularly affronted by claims that Australia’s electronic spy agency had sought to tap not only the personal phone of the Indonesian president but his wife as well.

“If the pollies think this is a bit of grand standing they are dead wrong,” the experienced export industry source said. ”I don’t know who (Prime Minister Tony) Abbott is listening to but it’s the wrong bloke. He must apologise and do it today.”

Another pointed out that while Indonesia’s Department of Trade was desperate to bring in more supply to reduce the price of meat within the country, the latest fiasco would provide more ammunition to those pushing within Indonesia to allow in beef from Brazil and India.

“The spy fiasco will not sit well with all Indonesians,” the source said. “”This will push Indonesia closer to Indian and Brazilian beef. It is all very complex and this just makes it more so.”

North Western Queensland MP Bob Katter yesterday called upon Prime Minister Tony Abbott to issue an immediate apology to the Indonesian President and the Indonesian people over the alleged phone tapping incident. Not doing so would put a crucial trade relationship in jeopardy, he said. 

“The extraordinary actions and stupidity previously shown by the ALP Gillard Government has now been compounded by the LNP’s refusal to apologise for this alleged phone tapping incident,” said Mr Katter.

The Indonesian President had extended the hand of friendship to Australia 'again and again and again', Mr Katter said, and this latest rift now had the potential to do serious damage to the relationship. “If you keep shoving a pointy stick up the tree log, eventually the Taipan will come out and bite,” he said.

The first test of whether the issue could affect the trade is likely to come in about three weeks time when the first import cattle permits for 2014 are due to be issued.

For the time being the recent increase in live cattle import permits from Indonesia has helped to restore some confidence in the northern cattle industry.

“It is part of the confidence rebuilding process which is a positive thing,” NTCA CEO Luke Bowen said. “We are seeing a few properties changing hands and that has got to be good.”