Rising demand and improving agricultural ties could see Australian live cattle exports to Indonesia reach record levels in 2014, as the future finally starts to brighten.

Rising demand and a relaxation of import quotas could see live cattle exports to Indonesia reach record levels this year. More than 270,000 head of cattle are set to leave for Indonesia in the three months to June, with some predicting the yearly total will exceed the 760,000 head of cattle exported in 2009; those numbers plummeted after Canberra suspended live exports in 2011, crippling the industry and souring bilateral relations. Now, however, with exports seemingly back on track and a deeper agricultural relationship beginning to emerge, many farmers are cautiously optimistic.

Almost three years after a controversial ban on live cattle exports crippled the industry, farmers are hopeful that exports may soon return to normal. ABC News recently reported that Indonesia will import around 270,000 head of cattle from Australia between the months of March and May. While the three-month total is higher than normal, due a spike in demand ahead of the festive season, observers maintain that exports could soon reach the levels seen before the 2011 suspension.

As Indonesian regional manager for Meat and Livestock Australia, John Ackerman, optimistically declared, ‘2009 was our greatest year, [with exports of] 760,000 head of live cattle, and there’s every reason to believe we might get close to that [this year].’

Whatever the final figure, annual exports are set to far exceed the 400,000 cattle sent to Indonesia in 2013. That will come as a welcome relief to farmers, many of whom have struggled in recent times. In 2012, following the much-maligned ban, annual exports to Indonesia dipped to as low as 280,000 head of cattle. With Indonesia accounting for over half of all Australian live cattle exports, the financial effects were disastrous. Faced with the prospect of financial ruin, many farmers sold their properties and moved on from the industry.

Now, for those who have stuck it out, the long-term picture looks decidedly more positive. Indonesia’s booming population, rising middle class and close proximity to Australia are likely to see demand continue to rise, even as diplomatic relations between the two countries remain strained. Moreover, faced with soaring prices and a failed beef self-sufficiency plan, Jakarta decided earlier
this year that it would remove its quota system for beef and live imports and replace it with a reference price system.

Under the new arrangements, the government will allow an increased volume of imported cattle and boxed beef to enter the market until prices soften to below 76,000 rupiah ($7.10). Some analysts, though, have cautioned that the recent flood of beef might see prices drop, with reports markets are already responding to the increased supply. Prices are currently around Rp. 92,000. Yet, because Indonesia’s trade ministry has not explained what will happen if prices move below the reference price of Rp. 76,000, no one is really certain how the rest of the year may play out.

One certainty, however, is that the overall agricultural relationship between Australia and Indonesia continues to improve. Earlier this month, a delegation of eight Australian trade and industry representatives met with 11 Indonesian counterparts in Jakarta to form a new partnership related specifically to beef. The “Indonesia-Australia Partnership on Food Security in the Red Meat and Cattle Sector” was hailed a success, with both parties deciding on a number of early harvest programmes to be funded through an assistance package.

That may seem a modest initiative, but the long-term benefits of the partnership could prove significant. Already, there is second meeting, tentatively scheduled to take place in Australia in August, where the two countries are likely to discuss investment projects covering the supply chain. This would see the relationship move beyond the current “we sell, you buy” mentality, with an exchange of expertise, labour and land, that is likely to add further value for both sides. After three gruelling years, it seems Australian cattle farmers may finally have reason to celebrate.

Andrew Manners is a research analyst with the Indian Ocean Research Programme at Future Directions International. He can be contacted at amanners@futuredirections.org.au

This article was originally published by Future Directions International. It is republished with permission.