The Indonesian Cattle and Buffalo Farmers Association said it doubts the government will be able to meet its target of achieving close to national self-sufficiency in beef production by 2014, despite a plan to subsidize bank loans to cattle breeders, a senior official from the organization said on Friday.
“Even with the subsidies, the target is still not realistic,” said Teguh Boediyana, chairman of the association, also known as PPSKI. “The government must seriously consider whether cattle breeders can meet domestic demand.”
He said the association’s members had already held a meeting to review the self-sufficiency target and the Ministry of Agriculture’s regulation on the implementation of subsidized bank loans.
With loan support, domestic cattle breeders are expected to expand national cattle stocks to increase beef production and reduce the country’s dependence on imports.
The government’s goal is to steadily reduce imported beef from 40 percent this year to just 10 percent by 2014.
Under the loan program, breeders will be able to obtain subsidized loans to finance the imports of high-quality sperm and breeding stock from Australia and New Zealand.
Agriculture Minister Anton Apriyantono last week issued a ministerial regulation to facilitate the implementation of the subsidized-loan plan.
Under the regulation, the government will provide Rp 145 billion ($15 million) in subsidies to provide loans at 5 percent interest to small breeders.
The market rate is currently about 14 percent.
Under the loan scheme, domestic breeders are expected to expand the national herd with the goal of producing about 200,000 additional animals per year, and to have at least 800,000 additional head of cattle by 2014.
The country would need 800,000 additional animals in order to produce the 117,600 tons required to reach the import target of just 10 percent by 2014, Teguh said.
“It will still be hard to meet the government’s target because we still need at least 800,000 additional head of cattle by 2014,” he said.
“A target of 70 percent domestic animals and 30 percent imported animals is still possible, but not 90 percent and 10 percent as targeted by the government.”
According to Ministry of Agriculture figures, beef imports accounted for only 20 percent of national consumption in 2000.
This rose to 35 percent last year and is expected to hit 40 percent this year, when the country is expected to import more than 70,000 tons of beef, mostly from Australia and New Zealand.
In order to properly implement the loan scheme, regional governments will need to act as guarantors on the loans, Teguh said.
“It is still the responsibility of banks and it is the banks that must assume risks such as the possibility of nonperforming loans, because the government will only subsidize the payment of interest,” Teguh said.
The government needs to establish clear performance guidelines to assess the feasibility of programs designed to achieve self-sufficiency in beef production, Teguh said.
“We often see conflicting figures coming from the government,” he said.
For example, the association does not have reliable information on the productivity of each buffalo. “The government revises figures but offers no explanation,” he said.
The government has also failed to clarify why a similar beef self-sufficiency target it announced in 2005 was abandoned, he said.
“The target of 90 percent self-sufficiency has not been achieved this year,” he said. “With one year still to go, the government has extended its target to 2014 without offering any sort of explanation.”
Teguh acknowledged that the House of Representatives (DPR) had approved the proposed budgets for programs such as the cattle loan scheme, but said it needed to carry out comprehensive progress reviews, conduct research to explain why some cattle development plans failed, and provide timely updates on such programs that are backed by reliable data.