ANY immediate prospect of Bra-zilian beef exports to Indonesia appears to have disappeared, fol-lowing an Indonesian Supreme Court ruling in favour of limiting importation to FMD-free countries only.
In recent months it appeared likely that Indonesia was going to accept a zone-based FMD status for Brazil, allowing beef imports from those Brazilian states declared disease-free. Processing plant approvals and import permits were understood to have been issued in expectation of a relaxation in the trade access.
However, the Indonesian Supreme Court on Friday handed down its ruling in a long-running judicial review over changes listed in a ministerial decree pertaining to beef imports from FMD-free zones, rather than country-based classification.
The court declared that the law was to be overturned and reverted to the original content, which directs that imports of beef must be from FMD-free countries only. The result means that Indonesian import permits issued earlier for Brazilian meat are now invalid.
Observers say this is a success for the coalition of industry associations including vets and cattle farmers in Indonesia who took up the fight against zone-based trade access on the basis of disease risk and other grounds. Brazil's limited ability to trace cattle movements from one state to another was central to their argument.
Increasing evidence is now emerging that the Indonesian beef industry is coming under considerable stress as a direct result of recent limitations im-posed on Australian live cattle imports.
One report this week suggested there are currently 140,000 cattle on feed across the country - about 50pc of industry capacity, and easily the lowest level of utilisation since the days of the Asian currency crisis in the late 1990s. That situation has been worsened by the substantial investment in feedlot infrastructure expansion over the past three years.
Finished cattle prices are con-tinuing to rise, and as local breeding cattle are being sold as well, there is increasing pressure on Indonesia's Ministry of Agriculture to find a solution.
A report out of Indonesia this week also suggests that a difference of opinion is emerging between Indonesia's current agriculture and trade ministers over the appropriateness of current cattle import limitations.
One prospect is that the Indonesian Lot Feeders Association, APFINDO, may be asked to release more cattle onto the market to increase availability of cattle over the Lebaran Muslim holiday period in mid September.
As anticipated, wet market prices have risen dramatically in August - fresh knuckle is up 20pc from 65,000 rupiah in July to R80,000 in late August, and is only likely to rise further in the lead-up to the Lebaran holiday.
Lotfeeders are hopeful of learning more soon regarding their access to feeder stock for the last quarter of 2010 as a means of easing meat prices driven by the supply shortage. They remain hopeful of gaining access to more import permits than the 92,000 head referred to by Indonesian authorities in July.
According to preliminary AQIS data (official ABS figures are not yet available) Australia's live exports to Indonesia have declined by more than 50pc in the past two months, sliding from 50,990 head in July to 23,915 for August.
If Indonesia's import limits take full effect, shipments this calendar year will fall to 450,000 head, down from almost 750,000 head last year.
Cattle Council of Australia executive director David Inall said once the current "caretaker mode" passed following the federal election, priority one would be to work with the new agriculture and trade ministers on the Indonesian import issue.
"Essentially these are government to government negotiations," Mr Inall said.
"What industry has been doing is working closely with our Department of Agriculture in Canberra, which has in turn been in close contact with senior Indonesian officials."
"This is a complicated, difficult issue, and it remains work in progress. While it is Indonesia's sovereign right to manage its domestic policy as it sees fit, we believe there is a better way to manage our relationship," he said.
"The development of northern Australia's beef herds has often happened in concert with feedlot development in Indonesia - it is a symbiotic relationship. So the message we are sending, where we can, is that once that relationship is changed significantly, as is happening now, our businesses in Australia may change significantly, also. We don't think that is in our interests, or Indonesia's."
The last time Indonesian cattle imports declined significantly during the Asian currency crisis, the nation rapidly liquidated its own cattle herd, including breeders and dairy animals, Mr Inall pointed out.
Commenting on Friday's Indonesian decision to reject any prospect of Brazilian beef imports, he said this was a positive outcome for the region.
"An enormous amount of effort and resources have been invested into supporting Indonesia's efforts to remain FMD-free. For our own disease risk interests as well as those of Indonesia, we believe this is a positive step forward," he said.
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