News

Indo officials to visit Australia to eye property investments

James Nason, 07/05/2013

A delegation of senior Indonesian Government officials is expected to visit Australia early next month to discuss opportunities to buy Australian cattle stations.

As reported by Beef Central in March, the Indonesian Government has expressed interest in buying and running cattle breeding enterprises in Australia to improve its beef supply issues.

The West Australian newspaper has reported today that senior officials from Indonesia's investment board, the BKPM, will visit Australia in June to talk to cattle station owners willing to take on Indonesian investment to secure beef supplies for its growing middle class.

The newspaper has reported that a senior Jakarta-based businessman, who is acting as a go-between for big Indonesian agribusinesses and Government enterprises, has contacted Perth-based Indonesian businessman Iwan Gunawan to identify opportunities in WA and Northern Territory cattle stations, while the Indonesian Embassy has separately approached the WA-based chairman of the Indonesia Institute, Ross Taylor, with the same request.

Four senior Indonesian businessmen and two Government officials also toured WA cattle stations last month according to the report.

“The approaches are understood to be a co-ordinated strategy to reduce the risk of live cattle exports being suspended again,” the newspaper said.

The West Australian quoted Mr Gunawan as saying Senator Ludwig's "kneejerk reaction" had offended Australia's biggest neighbour and contributed to its decision to invest in Australian cattle farms.

"If a country has an agreement to supply food, it can't just stop in one day, it has to be discussed at the table with the parties," he said.

"At least if they have their own investments here, they will have a say to minimise future problems."

In March State-Owned Enterprises Minister Dahlan Iskan told Indonesian media that the government was considering buying Australian cattle properties to help meet the country's target of supplying 90pc of its beef requirements from Indonesian production by 2014.

The minister said lower costs of production were behind the plan, noting that it cost only Rp 3 million (A$297) to produce a calf in Australia, one-third of the cost of producing a calf in Indonesia.

“But the fattening is indeed best done in Indonesia. Increasing the weights of cattle in Indonesia is cheap and quick,” Dahlan said.

Indonesian media reports in March said the ministry was planning to delegate the job of running an Australian cattle production operation to existing state firms such as livestock company Berdikari and agribusiness firm Rajawali Nusantara Indonesia (RNI).

During a visit to Darwin in June last year Indonesian president Susilo Bambang Yudoyhono called on Australian agribusinesses to help Indonesia expand its cattle industry by investing in Indonesian breeding operations, feedlots and downstream processing operations. No major investments have been announced since the president's visit to Australia almost 12 months ago.

There are historical precedents for Asian sovereign nations investing in cattle land in Northern Australia in order to secure food supply.

During the 1990s and early 2000s, the Sultan of Brunei's Carabao Developments built up a pastoral portfolio of about 600,000ha in size in the Northern Territory, while Desa International (Sabah provence, Malaysia) owned and operated more than 900,000ha of northern cattle land.

It is not clear how cattle from Indonesian-owned Australian properties would be treated under Indonesia’s import quota structure, and whether cattle and beef exported back to Indonesia from the properties would be considered outside quota.
 

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