An outcry is growing over the government’s move to restrict
imports of cattle and beef. While government officials say the aim is to boost
domestic production, Globe Asia finds
other, more suspicious, undertones.
In a land already brimming in mysticism and the
supernatural, 2008 was one for the books in Java. At some point during that
12-month period, the cattle population of East Java province miraculously grew
by nearly 680,000 head.
How this happened — cloning, spontaneous reproduction,
insertion by tractor beam from hovering UFOs – nobody knows, and the Ministry
of Agriculture is fastidiously avoiding questions on the subject.
the ministry’s own figures, the cattle population jumped from 2.7 million to
nearly 3.4 million without explanation.
What happened to those cattle remains a mystery, and there
hasn’t been any evidence to prove they ever existed. The ministry’ figures on
East Java cattle that were slaughtered or transported live out of the province
grew at normal rates between 2008 and 2010, meaning the extra 680,000 somehow
remain in hiding, or if you believe in such things, were beamed back up to
their alien space ships.
Thomas Sembiring, chairman of the Indonesian Meat Importers
Association (Aspidi), doesn’t believe in aliens or magical forces. He also
doesn’t believe the agriculture ministry’s figures on the stunning growth of
East Java’s cattle population.
“Can you do that without producing like a pig?” he asked
rhetorically during an interview at his office in Central Jakarta. “If you look
over the stats, a lot of questions cannot be answered.”
Indeed, East Java’s curious cattle population boom is just
the tip of the iceberg. Indonesian cattle and beef importers, Australian and
New Zealand exporters, as well as government officials from those two countries
are asking questions about many of the facts and figures coming out of the
Ministry of Agriculture these days.
Among factors being questioned are the ministry’s formula
for calculating Indonesia’s beef demand for 2011, its system for awarding
import quotas for boxed beef and live cattle, its decision to reduce boxed beef
imports by 58%, and the actual size of the country’s cattle population.
Individually, these figures are troubling, but cumulatively
they indicate the country’s beef industry is staring into the abyss. Finally
making its way onto the front pages after simmering for most of 2010, the
crisis centers around the Ministry of Agriculture’s controversial blueprint to
achieve beef self-sufficiency by 2014.
And as with so many cases where Indonesian politics
intersects with big business, the beef industry is beset with allegations of
political corruption, collusion and nepotism, religious discrimination and
conspiracy theories of involvement at the highest levels of the Indonesian
government to drive out foreign meat importers and corner the market of a
What is true or untrue remains to be seen. But according to
Indonesian and foreign industry experts, this much is known: the country has no
hope of becoming self-sufficient by 2014, or even by 2020, despite what the
Ministry of Agriculture claims. In addition, say the experts, the ministry’s
self-sufficiency program has instead caused a chain reaction that is making the
domestic beef industry less
self-sufficient while simultaneously reducing available supply and driving up
Worse, the Indonesian government may find itself dealing
with chronic and extended shortages of beef, as well as higher prices, as
Australian exporters turn to more open, friendly and reliable markets in
Russia, Turkey and Egypt for live cattle and boxed beef. “There is nervousness
in Australia about Indonesia as a trading partner,” said one Australian
agriculture industry official, who would only speak on background given the
sensitive nature of Indonesia’s beef industry debate.
“The warning bells should be there for Indonesia that they
are being by-passed in the international trade system, especially since they
want self-sufficiency,” the official said. “It’s conceivable that Australia
could by-pass Indonesia and do shipping contracts with Turkey and Egypt.”
That would, of course, be tragically ironic given that the
Yudhoyono administration touts food security as the main reason for its
self-sufficiency drive for beef as well as rice, corn, soya and sugar.
Indonesia’s growing population growth figures, combined with the millions of
expected new entrants into the country’s middle class in the coming years,
there could be a lot of angry, hungry voters.
Indonesian meet processing companies are already angry,
warning that the lack of supply for their bakso, beef sausages and other products will force them out of business.
More than half of all imported beef into Indonesia is used in the manufacturing
Seeds of disaster
How could it all go wrong for such an efficient industry?
Beef and cattle imports were one of the sectors notable for immunity to
Indonesian and Australian diplomatic spats, even in the wake of East Timor’s
independence referendum in 1999 and eventual statehood.
Between 2003 and 2009, annual live cattle exports from
Australia to Indonesia nearly doubled to 773,000 head, an average increase of
19% a year.
Choice cuts of Australian boxed beef for five-star Indonesian
hotels, restaurants and upscale grocery stores grew by 46% during the same
period. New Zealand, while a
smaller player, doubled its boxed beef exports to
Indonesia in the past two years.
The formula for success was a no-brainer. Australian cattle
breeders are among the most experienced and efficient in the world, and
Indonesia’s 240 million consumers are increasingly eating more beef as the
They also view Australian beef as better quality for acceptably
higher prices, and trust that it is healthy and meets halal standards. The industry had run like clockwork for
more than two decades.
And the benefit is not all one-way. Imported Australian
cattle go directly to feedlots in Java and Sumatra to be fattened up before
being slaughtered. This has created an agriculture sub-sector for Indonesian
farmers who sell leftover corn, grasses, pineapple skins and other refuse to
the feedlots. A single feedlot can employ up to 700 young Indonesian men and
“The growth in the trade of feeder cattle has led to more
jobs in Indonesia, has led to more use of their by-products. It’s been a
successful way of increasing their production,” says Allister Lugsdin
of Meat and Livestock Australia.
He also notes that the Australian government and the
country’s meat and livestock industry have spent great time, effort and money
helping their Indonesian counterparts improve productivity, efficiency, and
health and hygiene within their domestic industry.
After exports of cattle, boxed beef and offal from Australia
and New Zealand exceeded a record $700 million in 2009, giddy producers and importers wondered whether the
good times would ever end. Unfortunately, they did. Australian live cattle
imports into Indonesia dropped by more than 30% in 2010, and quotas for 2011
were capped at 500,000 head.
On several occasions last year, Indonesian agricultural
officials announced they were following through on a self-sufficiency plan to
increase domestically-born and -bred beef supply to the market to 90% by
curbing imported live cattle and boxed beef.
As the Indonesian side spent much
of mid-2010 counting how many imported head of cattle it needed, the
distribution of import permits began to mysteriously slow down.
For 2011, the Ministry of Agriculture capped boxed beef
imports at 50,000 tons, a staggering 58% reduction from the previous year
despite the fact that beef demand in Indonesia is rising. Sembiring of Aspidi
accuses the ministry of estimating total demand for 2010 at 403,000 tons by
simply multiplying Indonesia’s 237 million people by 1.7 kg, the government’s
official estimate of per capita annual meat consumption.
“They are only calculating on household consumption, but
what about all the other factors? Expatriates, people from international
organizations, diplomats and tourists? They are from countries consuming up to
10 times the amount of beef as Indonesians,” Sembiring states, adding that the
United Nations Food and Agriculture Organization estimates that Indonesians
annually consume 2.4 kg per capita.
He notes that actual beef demand for 2010 was 493,000 tons,
but the Ministry of Agriculture’s projected demand for 2011 is only 456,000
tons, meaning consumption would have to drop despite all the evidence saying it
is steadily growing. “They don’t consider economic growth … because (beef)
consumption among Indonesians is still so low, but it’s growing,” Sembiring
Adds a New Zealand trade industry official who asked not to be named: “The import quota numbers are totally out of thin air. The
numbers are just so far from reality. An argument can be made that Indonesia is
less than 50% self-sufficient in beef.”
What is clear is that the Indonesian government cannot
handle increasing demand for beef while simultaneously curbing imports:
Domestic production is simply not capable of filling the gap.
A case in point
occurred in September 2010 when beef prices in Jakarta skyrocketed ahead of the
Idul Fitri holiday due to undersupply, which local traders blamed squarely on
the agriculture ministry’s efforts to curb imports.
The situation only got worse. Given higher prices and lack
of supply, Indonesian cattle owners decided to make a quick buck by
slaughtering breeding female cows to meet demand, dealing a major blow to
government efforts to increase the country’s domestic herd size as part of its
The Ministry of Agriculture rushed to pass a
regulation banning livestock owners from slaughtering breeding females, but the
damage had already been done.
One meat importer estimates that “80% to 90% of what’s been
killed at the moment in Indonesia is productive breeding females.”
Under pressure, the ministry has commissioned a census to
determine Indonesia’s total cattle population, to help it accurately calculate
future domestic supply as well as import needs. Its self-sufficiency blueprint
states that the population should be at least 13 million, although many believe
the actual current number is at most 9 million.
Numbers aside, there is growing belief that agriculture
ministry officials are either in denial about Indonesia’s inability to become
self-sufficient in beef production by 2014, or hiding it to make it look like
the country is moving toward self-sufficiency.
During a meeting with visiting
Australian Agriculture Minister Joe Ludwig in March, Indonesian Deputy
Agriculture Minister Bayu Krishnamurti actually spoke about Indonesia becoming
a beef exporter to the Muslim world – even though Indonesia currently imports
around 44% of its beef supply.
While the enthusiasm of agriculture officials is admirable,
the reality is that Indonesia lacks the appropriate tracts of land, feed,
genetic skills for breeding, or experience to create an industry similar to
those of Australia and the United States, according to industry experts. By one
estimate, 40% of cattle in Nusa Tenggara Timur province are under-nourished.
“They don’t have a snowball’s chance in hell” of becoming
self-sufficient, says one expert.
That still has not stopped the ministry from curbing imports
and bringing forward the expiration dates on import permits.
In April two
importers filed a lawsuit against the agriculture ministry after 25 containers
of beef were stopped at Tanjung Priok Port in mid-January by inspectors who
declared the shipping licenses had expired.
Then there are the reported allegations that agriculture
ministry officials gave preferential treatment on quota allotments to importers
linked to Agriculture Minister Suswono’s Islamic-based Prosperous Justice
Two companies whose owners are Christians had their quota allotments
reduced, according to an industry source.
Sembiring of Aspidi declined to directly comment on the
allegations against the PKS, but said: “The quotas were not being distributed
equally. Every time the supply is lower than demand, there is always a problem.
You get a lot of importers trying to monopolize the quotas.”
While many of the domestic meat importers are angry, players
such as Sukanda Djaya Anzindo, Indoguna Utama and Bumi Maestro Ayu are avoiding
speaking out, apparently in hopes that the crisis can be resolved behind closed
doors. On April 13, the agriculture ministry announced that it had increased
the quota on imported boxed beef from 50,000 tons to 72,000 tons.
While this is a step in the right direction, industry
experts warn that piecemeal increases will not solve what could easily become a
long-term supply problem, as imports can’t just grow by throwing a switch.
“In the world beef market, there is undersupply due to
declines in (production in) the US, Argentina and Brazil,” states the
Australian agriculture industry official. “It’s hard to gear up the live trade
– shipping contracts, regulations to export. It’s a long lag. The boxed beef
trade can respond more quickly, but it’s still a lag time of weeks.” GA