Indonesia could open its market to cattle shipments from Brazil now that foot-and-mouth disease is endemic in Indonesia following last year’s outbreak.
The Asian country would replace Australia, which is its only source of feedlot cattle and from which it has imported between 500,000 to 1 million head annually in the last decade.
As the Beef Central portal explained, Indonesian government representatives have never tried to hide their desire to reduce Australia’s dependence on beef and live cattle.
In 2011, the Australian government suspended cattle exports to Indonesia before Ramadan after images emerged of some slaughterhouses mistreating cattle.
In recent years, the price of Australian cattle has risen sharply, exacerbating Indonesia’s desire to find and expand alternative sources of livestock.
As a result, it has opened its market to imports of frozen beef and buffalo from India and Brazil, although both countries have foot-and-mouth disease problems.
In recent years, government representatives from Brazil and Mexico have worked hard to get Indonesia to open its doors to their live cattle.
Concerns about exposure to foot-and-mouth disease persisted.
But now, with the foot-and-mouth disease also endemic in Indonesia, one main barrier to taking their cattle has been removed, although another major barrier has not changed: the high cost of transporting cattle between the countries.
The journey from both territories would take 3 to 4 weeks, compared to only 3 to 4 days from northern Australia.
About six months ago, Australian cattle prices remained much higher than Brazilian cattle, which might have been more conducive to viable trade.
However, with the recent price drop for these cattle, the eventual savings if Brazilian or Mexican cattle were imported are not as attractive.
Last week, some Indonesian cattle importers assured the Australian Financial Review that Australia’s “monopoly on live cattle exports to Indonesia is coming to an end.”
They expect Brazil to get the green light now that Indonesia’s foot-and-mouth disease is endemic.
“All the necessary regulations have been prepared, and the legal framework is almost finalized. I don’t think it will be long before we import cattle from Brazil,” said Didek Purwanto, chairman of the Indonesian Beef Cattlemen’s Joint Council.
LONG-TERM TRADE UNLIKELY
Experts close to cattle imports from Indonesia said they would not be surprised to see a small number of trial shipments from Brazil in the coming days.
However, they believe the economy is unlikely to support longer-term shipments to pose a significant threat to trade with Australia.
Djoni Liano, executive director of Indonesian Beef Farmers, told AFR that the Indonesian government is already “intensively harmonizing Indonesian and Brazilian regulations,” and “hopefully, a trade agreement between the two countries’ private sectors for cattle breeding will be reached shortly.”
While Brazilian exporters have the advantage of a government that is eager to do business and does not impose the same level of animal welfare assurance regulations on trade that Australia does, the cost of transportation remains a deterrent to beginning trade transactions.
The high fuel and long-distance ocean freight costs make trade little viable beyond a single or small number of trial shipments.
In 2021 Brazil made a test shipment to Vietnam, but despite claims that shipments would continue, that was the only one.
While Australian cattle are priced at around USD 3 per kg, Brazilian cattle are priced at between US$2.70 and US$2.80, a differential that would not offset the substantial shipping costs of transporting cattle from Brazil to Indonesia.
It also remains to be seen whether the government of the South American giant succeeds in appealing the measure imposed at the end of April by a court that banned the export of live cattle from all ports in the country.
With information from CONtexto ganadero
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