An Indonesian Government owned enterprise says it expects to acquire a 51 percent stakeholding in a large Australian cattle breeding operation, in line with plans to improve the security of Indonesia's beef supply, by the end of this year.
The president director of state-owned agribusiness company PT Rajawali Nusantara Indonesia (RNI), Ismed Hasan Putro, this week stated that the enterprise expects to acquire a major shareholding in a cattle breeding ‘firm’ running between 50,000 and 500,000 head of cattle.
Speaking to Indonesian media, he said the company had been carrying out assessments of five operations in recent months and expects to finalise an acquisition by the end of this year so the business can begin in January.
Once the purchase is made, he said RNI planned to send up to 10,000 head of live cattle from the Australian operation to Indonesia every month.
“We plan to acquire a cattle-breeding firm in Australia that has between 50,000 and 500,000 head of cattle to help meet demand for beef and live cattle in the country,” he said on Monday, according to the Jakarta Post.
The total budget RNI has allocated to the planned investment is 350 billion Indonesian Rupiah (A$32.4 million).
The RNI president director said 30pc of that budget will come RNI’s own coffers and the remaining 70pc will be funded through loans from state lenders. He told the Jakarta Post that the Commonwealth Bank of Australia was in place to act as facilitator to help support the transaction and acquisition processes.
Indonesian Government statements to date have indicated that it plans to buy around one million hectares of northern Australian cattle land.
However, RNI’s stated budget would suggest that it will only achieve the lower end of its planned scale by focusing on buying and owning the cattle alone, perhaps in a partnership or lease arrangement with an existing landholder, and not by buying land.
Either way it would seem that if the Indonesian Government is seriously considering acquiring a herd of the size it has indicated in northern Australia, it will have to dig far deeper into its coffers than the allocation it has made to date.
State-Owned Enterprises Minister Dahlan Iskan said two state-owned companies – RNI and Pupuk Indonesia – were currently being encouraged to acquire a beef company in Australia.
The minister said it was five times cheaper to breed cattle in Australia compared to Indonesia, but much cheaper to raise cattle in Indonesia compared to Australia.
“So, the cattle will be bred there but we will rear them here,” said Dahlan.
During his visit to Jakarta earlier this week Prime Minister Tony Abbott emphasised his support for Indonesia’s planned investment in Australia’s cattle sector, a statement that has been interpreted as a direct rebuff to his agriculture minister Barnaby Joyce for the post-election comments he made questioning whether Australia should sell agricultural assets to state-owned interests.