Live Export

Private sector leading Indo interest in Aust land

James Nason, 27/09/2013

New Indonesian investment in northern Australian cattle properties is close to being finalised according to northern property market sources.

While most Australian media attention has focused on plans by the Indonesian Government to buy cattle breeding land in Australia, the genuine purchasing interest that has emerged so far has come from the Indonesian private sector.

One sale is understood to have been negotiated between a Northern Territory cattle producing family and a publicly-listed Indonesian company. The sale is close to being finalised but cannot be officially confirmed until the Indonesian Stock Exchange has been formally notifed, which is likely to happen mid-next week.

It is one of several northern properties said to be attracting new found interest from offshore buyers.

Rawdon Briggs from Colliers International told Beef Central that Indonesian investment interest was “very real”, with the company currently manaing inquiries for agricultural land from a number of industrial and commercial companies within Indonesia.

In another confirmed northern sale this week, Colliers sold a 527 hectare cattle property south of Tully in North Queensland under the hammer at auction on Wednesday for $920,000.

While private Indonesian companies show genuine interest in Australian investments, there has been little evidence so far of interest at Indonesian Government level translating into physical property inspections.  

A key question arising from the Indonesian Government's land acquisition plans is what it hopes to achieve from the move.

Its stated motivation is to secure a reliable supply of beef to meet the demands of its large and growing population in future.

Indonesian ministers, in comments quoted by the Australian media this week, have described investments in Australian grazing land as the new beef “self-sufficiency” strategy for Indonesia.

Effectively, their stated vision is to secure Indonesia’s future beef supply needs by running Indonesian-owned cattle on Indonesian owned properties in Australia, from which to supply the country’s future import requirements.

Indonesia’s finance minister told Australian media that the initial plans to buy one million hectares of land are effectively a pilot project and the Indonesian Government plans to buy more country going forward. 

If Indonesia wants to buy enough land to produce all of the cattle it will need to satisfy its future demand needs, all the land in the NT may still not be enough. 

Prior to the weight and quota restrictions applied by Indonesia on Australian cattle imports from 2009 onwards, in an unsuccessful bid to encourage its own farmers to increase beef production, Indonesian imported more than 700,000 cattle a year from Australia.

Acheiving that level of turnoff per year would require a breeding herd in the millions. 

Indonesian ownership of Australian grazing land and cattle would not protect the country in the event of a future Australian Government decision to ban live exports were that to happen, because the cattle would still be subject to the same Australian laws and regulations as Australian owned cattle.

The reality is that Indonesia, through its vast market, huge buying power and close proximity to Australia, already exerts a significant level of control over the supply of cattle within Australia’s northern live export zone, without the costs or complexities of owning and running large areas of Australian cattle land. 

Working in cooperation with Australia’s northern cattle industry and sending the positive market signals Australian producers need to increase production would likely achieve more for the future security of Indonesia’s beef supply than the acquisition by the Indonesian Government of Australian cattle stations.

Others with close links to Indonesia say that Indonesian Government hopes that by demonstrating its willingness to invest in Australian grazing land, it will in turn help to encourage Australian investment in its own cattle breeding industry in Indonesia.
 

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