Live Export

Indonesia set to release second quarter import permits

James Nason, 17/03/2014

Indonesia is set to issue import permits for 278,000 cattle for the second quarter, starting April 1, a senior trade ministry official has told local media.

Bachrul Chairi, the Indonesian ministry of trade’s director general for foreign trade, told reporters in Jakarta on Friday that Q2 permits will be issued for 214,000 head of feedlot cattle, and 64,000 slaughter-ready cattle.

The figure is nearly twice the 160,000 cattle approved for import in the first quarter.

The second quarter is always the period of greatest activity for Australia’s live cattle trade to Indonesia, as Jakarta looks to increase the number of cattle on feed ahead of the July/August Labaran (Ramadan) Muslim festival, which involves daily fasting for a month followed by days of celebratory feasting across the country.

Importers have told Beef Central over the weekend that until permits are issued they can not be sure what actual volumes will be, but they agreed it is likely that numbers will be “up there” with the 278,000 figure reported.

There has been no indication yet as to how many permits Jakarta will issue for boxed beef imports over the next three months.

Under Indonesia’s new reference price system for determining import requirements, live cattle importers must apply for a specific volume of import permits for each quarter, and must then supply at least 80pc of the volume they are allocated to the market as finished cattle within a fixed period of time.

The new system is designed to overcome Indonesia’s beef shortage and the upward pressure it is placing on beef prices and inflation as quickly as possible.

The 278,000 head figure Mr Chairi says Indonesia plans to import over the next three months speaks volumes about how much has changed in the Australia-Indonesia cattle trade since Jakarta abandoned its latest five-year-plan to achieve self-sufficiency in beef production, implemented in 2010, in October last year.

At the start of 2013, when it was still pursuing a goal of supplying 90pc of its beef demand from local production by 2014, Indonesia announced it would import just 267,000 cattle from Australia for the entire year.

However the shortage of beef caused by the year-on-year cutbacks to import volumes, particularly the dramatic cuts made in the wake of the June 2011 export ban by Australia, saw Jakarta abandon its latest self-sufficiency policy last October in favour of the new system, which is designed to improve beef supply and lower prices as quickly as possible.

One industry source, who asked not to be named, told Beef Central over the weekend that an over-supply situation was now developing which was placing downward pressure on cattle prices ex-feedlot in Indonesia. The source said there was a flood of manufacturing beef now in the country, with 85CL beef in particular now proving very hard to move. While an over-supply of beef was exactly the outcome the Indonesian Government was trying to create to bring down consumers prices, the source said the policy is currently placing a major squeeze on the profitability of Indonesian lot feeders, which is likely to impact on the number of permit applications they will apply for in the third quarter.

Indonesia has announced plans to import 750,000 head of live cattle throughout this year to make up the projected difference between local cattle production and forecast national beef consumption in 2014.

At present Jakarta believes the nation’s cattle herd will be able to supply around 443,000t of beef in 2014, well short of projected national consumption of 575,000t. It relies upon imports to make up the difference.

In the first quarter, the ministry allowed 35 companies to import 130,245 head of feedlot cattle and 16 companies to import 26,360 head of slaughter-ready cattle.

Quoted by the Jakarta Post, Mr Chairi said that roughly half of the total 156,605 head of live cattle that were allotted for the first quarter had been delivered as of last week, while the rest were expected to arrive at the end of this month and in the upcoming month.

Of the first quarter’s cattle imports that have been delivered, 58,600 head were feedlot cattle and 12,000 head were slaughter-ready cattle.

Mr Chairi also added that Indonesia aims to import 185,000 head of female cattle for breeding this year, and said it has received 2500 head of female cattle during the first quarter. 

HAVE YOUR SAY

Your email address will not be published.

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Beef Central's news headlines emailed to you -
FREE!