Slaughtering Indonesia's cattle trust

The government’s decision to halt live cattle exports to Indonesia, without warning, deeply disturbed Indonesia. Australian beef accounts for 25 per cent of the country’s meat and is a vital source of protein for millions of Indonesians. There are also thousands employed in feedlots, abattoirs and downstream processing, and Indonesia had considered Australia to be close enough to form part of its own food security.

In addition, the Australian government has long had a policy of supporting neighbouring countries that are members of global animal health organisation OIE as they progressively implement its standards of animal handling and welfare. Indonesia is such a member.

The export ban undermined all that. Many in Indonesia now regard Australia as an unreliable supplier, and there are strong indications the country will seek to diversify its sources by importing cattle and beef from other countries while renewing efforts to become self-sufficient in beef by 2014.

It will be some time, perhaps several years, before we see the full impact of that. For the moment, the Indonesians are displaying remarkable tolerance, probably much more than Australians would show if another country had suddenly cut off a major part of our food supply. Permits to import live cattle have been reissued and there is no overt resentment at Australia’s insistence on supervising the treatment of cattle owned by Indonesians within Indonesia.

The Indonesian government allows live imports because they satisfy demand for freshly slaughtered meat sold in wet markets. This is popular for financial and cultural reasons and a necessity for those who do not have access to refrigeration. Live imports also generate local employment in feedlots and abattoirs. Indeed, the reason cattle from Australia cannot exceed 350 kg is to ensure they must undergo local fattening prior to slaughter.

Australia has a natural advantage as a supplier of live cattle, given its proximity and Brahman species, but is not the only possible source. Brazil, with more than six times Australia’s cattle population, would be quite happy to supply Indonesia. So would Argentina, which has double Australia’s cattle population.

There is also a large market for boxed beef in Indonesia, chilled and frozen, into which Australia sold over 50,000 tonnes in 2009. Chilled beef, which is higher quality and more expensive, is mainly sold in supermarkets and restaurants. Frozen beef, which includes some lower priced options, can be thawed and sold in wet markets although it is not the preferred choice of consumers.

There are two reasons Indonesia is not already importing live cattle from countries other than Australia. One, fairly obviously, is freight. The other is the risk of introducing foot and mouth disease (FMD). Indonesia is classified by the OIE as FMD-free without vaccination and has a policy of only importing cattle and cattle products from countries that are similarly classified (as does Australia).

FMD occurs in Brazil and Argentina, although not everywhere. Both have states or regions classified as FMD-free without vaccination and also areas classified as FMD-free with vaccination. A growing number of FMD-free countries are willing to accept imports from one or both of these in order to take advantage of their lower prices.

With boxed beef, Indonesia has choices apart from Australia, including New Zealand and the US. If it were to allow imports from FMD-free regions or states, it would have more. Most can produce beef at prices that are comparable to Australia’s.

There is also a possibility of beef being imported from India, which was contemplated a couple of years ago but did not proceed. Some Indian states are FMD-free, although they are not internationally recognised. India has 280 million cattle, the majority of them buffalo, equal to the combined cattle numbers of Brazil and the US and about fourteen times that of Australia. Indian beef is said to be the cheapest source of red meat protein in the world.

Irrespective of what the Indonesian government does about diversifying sources, the Australian government’s new permit system for live cattle exports will stimulate a search for alternative supplies. Only a handful of exporters will be able to retain responsibility for cattle as they progress through Indonesian feedlots and abattoirs. MLA is predicting exports to Indonesia will be down 40 per cent this year.

Indonesians are also no more enthusiastic about being told what to do by foreigners than Australians, and will only accept it while the Australians keep offering incentives and they have no viable alternative. The moment they have other options or the Australians stop paying, cooperation will cease.

Even before the live export ban, the beef market in Indonesia was complex. Beef importers and processors were trying to maintain imports, consumers wanted to keep prices down, local beef producers wanted to limit imports to reduce competition, and the government wanted the country to produce its own beef but also guarantee supply and keep prices down.

All this means Australia’s northern cattle industry is facing an uncertain future, with long-term reduced demand. Producers currently left with large numbers of cattle they cannot sell are unlikely to see a major rebound next year. While the Indonesians no longer trust Australia, many cattle producers no longer trust the Australian government and will not be investing in the industry.

After all that, the outlook for cattle welfare is not much changed. Most Australian cattle slaughtered in Indonesian abattoirs will be stunned, as they were before. Some will not, as the OIE guidelines allow. No change there either.

And, of course, levies paid by Australian beef producers will continue to be used to raise standards in Indonesian abattoirs, including greater use of stunning – as long as the Indonesians continue to buy our cattle.