Ag minister Joe Ludwig calls it scare mongering, his senate counterpart and career veterinarian Chris Back calls it a matter of enormous concern to Australia’s biosecurity.

Linking last year’s ban on live cattle exports to Indonesia to an escalated threat of foot and mouth disease in the country may seem a long bow to draw at face value, but the view is increasingly gaining currency as a plausible threat based on recent trade developments.

The link is made by joining the dots from last year’s ban to Indonesia’s subsequent decision to slash import quotas and on to the widespread shortage of beef and surging prices that have occurred in the market this year as a result.

The higher than usual prices during Ramadan and Labaran have been widely reported to have attracted large volumes of smuggled buffalo meat into Indonesia via its border with Malaysia from India, where FMD is endemic.

Indian buffalo meat was selling for around $3/kg in Malaysia during Labaran, but was able to command a far more attractive US$10/kg in Indonesia.

FMD can be transmitted by meat from contaminated animals, as the Australian Veterinary Association explained to Beef Central during last year’s ban.  The peak veterinary body pointed out that there has been a ‘very close association’ between meat imports and major FMD outbreaks around the world in the past.

Last year’s temporary ban cut off a major source of beef supply for Indonesia, suddenly and without warning, just two months out from its peak annual period of demand for beef during Ramadan.

While Indonesia’s stated desire to achieve self-sufficiency in beef production pre-dates last year’s ban, the country’s actions since then suggest the controversial event strengthened its resolve to reduce its reliance on Australian beef and accelerate its self-sufficiency plans.

Since the ban the central Government has slashed import quotas of live cattle and boxed beef from Australia, and has introduced new barriers to trade including a 5pc tariff on cattle imports and a new requirement for commercial breeding stock imports be supported by full pedigree information (further updates on these issues at end of this article).

When faced with clear signs of a shortage leading up to this year Ramadan, the Indonesian Government chose not to ease quota restrictions on live cattle imports from Australia, but instead Indonesian ministers voiced their intention to relax laws to allow beef imports from FMD-free zones within FMD-affected countries such as Brazil and India.

Statements such as these have fuelled a growing level of concern that FMD could soon re-establish on Australia’s northern doorstep.

Porous borders

Liberal Senator Chris Back last week challenged Agriculture Minister Joe Ludwig over the issue in the Senate, asking if he accepted that last year’s ban had increased the risk of FMD emerging in Indonesia through illegal imports of Indian buffalo meat or through the country’s flagged intentions to import meat from Brazil.

Minister Ludwig brushed off the claims as a ‘scare campaign’, and pointed to the Government’s implementation of the Exporter Supply Chain Assurance Scheme as evidence of its support for Australia’s live export industry and improved animal welfare outcomes.

In a speech following the exchange, Senator Back said he was aggrieved that when matters of enormous concern to biosecurity in Australia were raised, based on the “very real threats of a return to FMD to Indonesia”, there were simply dismissed by the minister as a scare campaign.

He said Indonesia’s stated intentions of increasing imports from Brazil was a major concern, because of potential for ‘leakage’ to occur in the movement of live cattle between FMD-control and FMD-free zones in the country.

“I repeat the fear which has been expressed by the veterinary profession and throughout the community that if we end up accepting beef from those countries into Indonesia, those diseases will return to Indonesia, and with our porous borders we will end up with them in Australia.”

Brazil 'on the prowl'

A prominent stakeholder in Australia’s live export trade with Indonesia, who asked not to be named, said it was clear that “Brazil is on the prowl and close to a kill” in its efforts to re-establish beef exports to Indonesia.

He said Brazilian companies were understood to have already accepted Indonesian president Susilo Bambang Yudyohno’s invitation to invest in helping to expand Indonesia's cattle industry in its eastern provinces, particular the Nusa Tenggara Timur province (the president extended the same invitation to Australian companies during his visit to Darwin in July).

“It is becoming very clear that Brazil is making some good inroads to establish strong relationships with Indonesia,” the trade source said.

“Sadly Australia no longer has strong relationships in Indonesia, and thus is getting little help.

“What’s more, the ban of 2011 will not be forgotten by those pulling the strings.”

He added that the move by the Indonesian Parliament to allow beef imports from FMD regions was gaining momentum, and could be approved within six months.

“This will be a massive blow for Australia, both for its marketing of live cattle and beef as well as the prospect of FMD inching closer to Australia.”

A national forum on FMD involving Government officials, livestock leaders, scientists and peak industry stakeholders in Sydney last week identified that vigilance and awareness about the risks, and a “determination to protect the livestock industry”, was the only way to ensure Australia did not suffer the dire consequences of an FMD outbreak.

In answers to direct questions from Beef Central last week, Federal agriculture minister Joe Ludwig rejected the assertion that last year’s sudden ban on cattle exports may have inadvertently increased the risk of foot and mouth disease re-emerging in Indonesia.

“Indonesia’s move to self-sustainability is nothing new and is entirely a matter for Indonesia,” Senator Ludwig said.

“The Indonesian Government continues to issue import permits for livestock, and the Australian Government continues to issue export permits for livestock.

“The Indonesian and Australian Governments understand the mutual benefits of this trade and are committed to working together to build a strong future for it.”

Asked if the Federal Government was concerned about the potential for FMD to re-establish in Indonesia through imports from either legal or illegal channels, the minister’s office provided a response from the Department of Agriculture, Fisheries and Forestry:

“The Australian Government closely monitors international developments with regard to FMD risks posed to Australia and our import policies are constantly adjusted to reflect international developments, such as the disease status of our trading partners.”

Beef Central also asked if Australia was taking any action to urge Indonesia not to risk its FMD-free status by importing beef from FMD-risk zones.

“This is a matter for the Indonesian government,” the response stated.

“The Australian government has provided significant support to Indonesia over the years in achieving and maintaining its FMD free status which has direct benefits to Indonesia and its neighbours.

“Australia also provides animal health support to many other countries in south-east Asia where FMD is present.”

Meanwhile, reports from the trade continue to reinforce the view that the shortage of beef in Indonesia and the resulting high prices has attracted a significant influx of female cattle into abattoirs, which has implications for the country’s self-sufficiency ambitions.

Several sources within the market have made the same observation to Beef Central in recent weeks, with one explaining that “Farmers are receiving very high prices and are keen to take advantage to the situation”.

5pc tariff, pedigree issue 'far from resolved'

Contacts have added that the 5pc import duty situation is far from over, with recent meetings confirming that the duty will still be payable by importers on applicable cattle shipped in from Australia since January 1, 2012.

However, in a potentially significant development, there is a suggestion that a pending Ministerial Decree will allow feeder steers to be imported free of duty, and that feeder heifers will continue to incur the duty after the Decree is issued.

Even if the tariff is removed on feeder steers, a 5pc tariff on feeder heifers would still represent a huge blow to the importers. “At A$2/kg FAS, exchange rate of A$1.05 to the USD, 5pc import duty and increasing feed costs there is little margin left for the Indonesian importer,” one importer explained to Beef Central.

The tariff is not consistent with Indonesia’s obligations under the ASEAN-Aus-NZ-Free Trade Agreement, and it is on this basis that Australian authorities are negotiating to have the tariff removed.

The status of the pedigree requirement for breeder heifers also remains unclear, with most Indonesia government offices closed over the Labaran period. It is understood a new Commercial Breeder Protocol is being worked through, but will still take time to finalise.