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Trade awaits protocol fix for 10,000 stranded breeders

James Nason, 24/09/2013

When Australian exporters talk of the risks of doing business in an ever-changing regulatory environment like Indonesia, they don’t need to look far to find supporting evidence.

An obvious example occurred last year when Indonesian departmental officials blocked hundreds of containers of imported beef from Australia, the US and New Zealand on the wharves in Jakarta over claimed concerns about the validity of import permits.

Exporters were able to prove their import permits were indeed valid, but not before their beef had been stranded for months and they had lost millions of dollars in lost sales and value as a result of the unjustified trade freeze.

That episode is believed to have been a key trigger for an explosive corruption investigation that has seen several senior Indonesian political figures charged with accepting bribes from meat importers in return for providing favourable permit allocations.

Another case that highlights how sudden changes in regulations can dramatically impact upon commercial players was Indonesia’s sudden decision in July last year to require that all imported commercial breeding cattle from Australia be supported by full pedigree certificates.

Just one month before that requirement was imposed, Indonesian President Susilo Bambang Yudhoyono had appealed to Australian cattle exporters in Darwin to send more shipments of breeding cattle to support the country's push to achieve self-sufficiency in beef production.

Now more than a year later, some 10,000 Australian breeding cattle remain stuck in quarantine limbo in feedlots as a result of the pedigree-requirement.

Some of those cattle had been imported to Indonesia by large-scale lot feeding, processing and value-adding company Santori under an initiative to develop a large 'breeding under palm' project to support Indonesian Government’s self-sufficiency aspirations.

Like the other importers involved, Santori has borne a significant cost to hold those cattle in quarantine in feedlots until the dispute can be resolved. 

The fate of the quarantined cattle now rests on the outcome of court action.

Santori recently won a legal challenge against the Indonesian Government's decision, but it is understood the Government has since rejected the court’s ruling and is now taking the case to a higher court.

In the meantime the Indonesian Government is believed to have drafted a new protocol that would allow the import of productive heifers, but Australian Government and industry representatives say they have yet to see the new protocol.

Trade representatives have told Beef Central the new protocol, when enacted, should allow all of the detained breeders to be released.

However, the future of breeding cattle exports to Indonesia is likely to rest on whether Indonesia holds firm to a previously-stated requirement that productive heifers must have had at least two calves before they can be imported to Indonesia.

The Australian Government would not be able to provide certification to that degree.

At the same time, with Indonesia’s cattle herd shrinking, Indonesian officials are under increasing pressure to come up with a protocol that allows the country to increase its cattle population and address its beef supply shortfall.

Agriculture Minister Suswono told the Indonesian media earlier this month that Indonesia is finalising a ministerial regulation which will encourage importers to bring in heifers.

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