The Indonesian government has confirmed industry fears in announcing that only 98,000 head of cattle will be imported from Australia for the remaining six months of 2012.
It takes the total number to 283,000 for this year, down from 410,000 last year.
Import permits were initially issued at an even 125,000 a quarter last year - but this year only 60,000 permits were issued in the first quarter and 125,000 for the second stanza.
In a statement to Fairfax Agricultural Media yesterday, a Federal Agriculture Department spokesperson said the Indonesian Ministry of Trade had recently signed off on import permits for another 98,000 head of live feeder cattle for the rest of the year.
However, the statement said the Indonesian Ministry of Agriculture could reassess the supply and demand situation following the annual month-long Ramadan religious festival - which is scheduled to start on July 20 this year - to determine if additional imports are needed to supplement domestic cattle supplies.
Industry sources say confirmation of the dramatically reduced cattle import numbers was to be expected, totalling 283,000 for the year.
The reduction continues on from the major political and industry fall-out caused by last year’s snap suspension of the live cattle trade to Indonesia.
Indonesia cut its import numbers as a consequence of the month-long trade ban that saw new animal welfare measures implemented in the key market.
In 2009, Indonesia’s cattle imports hit a historic high of 750,000 but fears are now held numbers could slump even further below 283,000 in 2013.
Indonesia is now making stronger moves to implement a national policy to achieve beef self-sufficiency by 2014.
The issue around cattle import numbers and its impact on local industry was discussed formally and informally around the recent high level trade talks between the Indonesian and Australian governments in Darwin.
Northern Territory Cattlemens’ Association Executive Director Luke Bowen attended the trade forum and says the reduced import numbers are frustrating given there’s beef demand from Indonesia that can’t be met by Australian cattle supplies, due to lingering trade issues.
But he retains faith in the Indonesian market saying there’s plenty of long-term value for the Top End’s cattle producers.
Mr Bowen said while the Indonesian announcement seemed official he believed there was still a chance more than 283,000 head of Australian cattle could be imported this year.
He said Indonesian importers had already been notified that their cattle import allowance had been reached for the next six months.
But once Ramadan concludes there was still “room to move” with a potential increase in numbers for the last quarter.
Mr Bowen said beef prices had increased by more than 30 percent in the Indonesian market recently and they may decide to increase cattle import permits to relieve some of that market tension.
He said while the ultimate decision was up to Indonesia, there may be a further decline in cattle import numbers in 2013 as self sufficiency plans increase.
Mr Bowen said he had no idea what the percentage decrease may be next year - but understood the Indonesian Agriculture Minister Suswono had signed off on making Indonesia self sufficient by 2014 for nine key commodities including beef, rice and soybeans.
However he said Indonesia also faced a counter challenge to its self-sufficiency policy with increasing demand for food.
It may be easier to achieve self-sufficiency by the 2014 deadline for popular food commodities like rice than in beef or cattle, due to greater production potential.
Meanwhile, live exporters are concerned about the Indonesian government’s recent moves to impose a 5 percent tariff on live cattle imports, back-dated to January.
It’s understood the 5 percent tariff could potentially cost importers millions of dollars, in addition to the increased compliance and implementation costs associated with the government’s new Exporter Supply Chain Assurance System (ESCAS).
The Australian Livestock Exporters' Council CEO Alison Penfold said the tariff issue was discussed during talks between leading live export industry figures in Indonesia last week.
Ms Penfold said there was a “definitional issue” around what’s considered “oxen” which carries no tariff, or “other”, which qualifies for the 5 percent tariff.
She said the Indonesian government saw cattle as “other” and was now looking to impose the tariff retrospectively on all live cattle imports backdated to January, potentially costing industry millions more dollars.
Ms Penfold said she had no idea why the Indonesian government was making the sudden change and imposing the tariff without any real notification.
She said the issue was complicated and a concern for live cattle exporters and Indonesian importers who are already being weighed down by dramatically reduced cattle import numbers and additional cost burdens from ESCAS.
Ms Penfold said industry may be able to pass added costs from the 5 percent tariff back through the system - however some have said ESCAS is already costing them an extra $5 per head.
She said industry had no issue with ESCAS and potentially over time, once the improved animal welfare outcomes were more well-established, the system and its costs may become less onerous.
Mr Bowen said the 5 percent tariff would “clearly” be a significant cost impost on the live export industry, especially if it was charged retrospectively on imports backdated to January.
He said the issue was discussed earlier in the year and believed it had been resolved.
But industry members had recently been sent bills, or invoices, demanding payment of the tariff while the definition on what was considered imported oxen or other, remained unresolved.
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