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AustIndo partnership driving Indo abattoir development

James Nason, 28/08/2013

Sutarto Alimoeso, president director of the Indonesian Government's food supply arm BULOG, with Garry Hill, AustIndo director, at the IndOz forum in Brisbane last week.A large island in eastern Indonesia, located just two days sailing from Darwin, is on track to become a new processing centre for Australian live cattle and beef in Indonesia.

The development is a joint venture between AustIndo Pty Ltd, a company owned by Australian cattle and beef industry interests and headed by former large-scale Qld and NT cattleman Garry Hill, and Indonesian company Ficorp Pty Ltd, owned by Indra Hasan, an Indonesian businessman with significant interests in ship building, coal mining and forestry in Indonesia, and strong Indonesian Government connections.

While moves to bring Australian and Indonesian partners together have recently gained momentum following Indonesian Government calls for greater Australian investment in its cattle and beef supply chain, the AustIndo/Ficorp project has been in the making for more than three years.

Mr Hill first met Mr Hasan in 2010 during meetings with the then-Indonesian ambassador to Australia, Primo Alui Joelianto, in the wake of Indonesia’s decision to introduce 350kg weight limits on Australian cattle imports.

Mr Hill and Mr Hasan found common ground in their discussions about the need for strong, long-term investment partnerships that recognised the needs of both countries.

Since then they have jointly investigated a number supply chain development options, a process which has taken Mr Hill to all corners of Indonesia including Kalimantan, Aceh and Timor.

That led to Sumba Island being identified as an ideal location for the development of a modern importing and processing facility for Australian cattle.

Mr Hill gave Beef Central an insight into the progress of the joint venture during the IndOz beef trade and investment forum in Brisbane last week.

Sumba IslandSumba Island is a 91,000ha island in the Nusa Tenggara Timur province in eastern Indonesia, just two days sailing from Darwin.

While it is home to a city of three million people, and several smaller villages, the island’s land area is largely undeveloped.

Under a joint venture also involving Primo Small Goods based in Scone, NSW, AustIndo and Ficorp have advanced plans to develop a modern abattoir on the island, adjacent to a new deep-water seaport which is currently being developed.

Mr Hill has an existing partnership with Primo Smallgoods under the brand Indo Primo, which is currently exporting carcase and packaged beef from Australia directly to Jakarta.

The first stage of the Sumba Island development, expected to be completed next year, will involve the construction of a slaughter facility with freezing capacity, which will enable ready-to-slaughter cattle imported from Australia to be processed into quarter beef for distribution into Indonesia’s larger population centres, such as Java and Sumatra, or for re-export to other countries.

Through its Indonesian partners the project has received strong support from Indonesia’s Central Government.

The Government has approved the project under its ‘masterplan for the acceleration and expansion of Indonesia’s economic development’, and has granted a 50-year license to AustIndo and Ficorp to use 69,000 hectares on the 91,000ha island.

The Government is also doing a lot of the ‘heavy lifting’ required to develop supporting infrastructure for the project.

It is currently constructing a new seaport, which as of last week had been 80pc completed, while the Indonesian military and university scholars were also assisting by providing training to local villagers and building infrastructure such as roads and fences.

The location of Sumba Island in Indonesia’s easternmost territories is also seen as a potential future asset for Indonesia’s border security.

“It is a multi-purpose investment, we hope one day it will be a distribution centre for a lot of products that come for Australia that can be quarantined and go through a customs centre on the site,” Mr Hill said.

Mr Hill said the Indonesian Government was seeking “honest help and expertise” from Australia to invest in and build beef supply chain infrastructure in the country.

One of the key obstacles that currently stands in the way of the project’s viability is the lack of import permits for ready-to-slaughter cattle from Indonesia.

However Mr Hill said the project's Indonesian partners were confident the Central Government will ultimately increase permits for ready-to-slaughter cattle in order to underpin security of beef supply.

“This is one of the many ways they have to fix their food security problems, and where Indonesia can have a direct relationship back into industry,” Mr Hill said.

While the Indonesian Government has been strongly urging Australian investors to invest capital and expertise in the country’s beef and cattle supply chain for more than a year, to date that invitation has generated little in the way of new investment.

Australian industry stakeholders at last week’s IndOz forum blamed an uncertain investment and regulatory environment for the lack of engagement to date.

Beef Central asked Mr Hill why AustIndo has been prepared to take the plunge where others were cautious to tread.

He said that finding a partner closely associated with the Government was essential to providing to a higher level of certainty.

Mr Hill said the Central Government had supported the project to date and in time he believed it was likely the Central Government would eventually take ownership.

“The Government has shown their will to do this through agreeing to put it into their management plan,” Mr Hill said.

“What we have done has gone out and establish this operation though private enterprise, with the view that it will one day become a Government enterprise.”

Future stages of the development will include breeding operations on the island and further processing capacity including boning rooms and packaging operations to enable greater value-adding.


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