Australia and RI strive to revive cattle trade

Australia and RI strive to revive cattle trade

SYDNEY (Bloomberg): Australia and Indonesia are trying to revive Indonesia's live cattle trade, halted last year when Indonesia's currency collapsed.

"There are meetings right now in Jakarta between government and industry to discuss resumption of trade in meat and cattle," said Bill Hetherington, an officer at the Australian Meat Council, which represents Australian cattle processors.

Australia's exports of live cattle to Indonesia in the eight months ended Aug. 31 shrank to just 3,259 head, compared with 240,000 head in the first eight months of 1997, producer-funded marketer Meat & Livestock Australia said.

Indonesia was Australia's biggest buyer of live cattle until last year's economic crisis in Southeast Asia dragged the Indonesian rupiah to as low as 14,500 to the U.S. dollar from about 2,500 a year earlier. Now, the Philippines is the largest market for live cattle exports.

Hetherington said the discussions will cover possible financial assistance by the Australian and Indonesian governments.

The Industry and trade Minister Rahardi Ramelan said Tuesday that the Indonesian government would subsidize the import of cows after the Australian government ruled out a request to provide subsidies.

"That's pretty big news, depending on whether they actually get the money to do that," said Peter Weeks, chief economist and manager of livestock information services at Meat & Livestock Australia.

Christopher Creal, executive director of the Australian Meat Council is involved in the talks in Jakarta. Others include Bill Cordingley from Meat & Livestock Australia and Gary Cullen, an officer at the Australian Department of Primary Industry & Energy.

Earlier this month the Indonesian government reported it was set to import at least 100,000 cows from Australia to meet domestic demand and rebuild local herds in the lead-up to holidays at the end of the year.

Australian live cattle exporters and beef market analysts hadn't expected the trade to resume until the rupiah rose to at least 7,000 to the U.S. dollar, Weeks said.

The rupiah is presently 11,100 to the U.S. dollar.

While Indonesian authorities would like to see the sale proceed, both the Australian and Indonesia cattle industries are hesitant about the proposal, said Kevin Sheill, chief executive officer of Livecorp., which represents cattle exporters, for fear that it will create expectations within Indonesia that low priced beef will be available.

"It would also create expectations that people would get cheap meat," he said, possibly spoiling the commercial environment for months or years to come. "There's no way in the world we could supply enough meat to significantly lower beef prices there."

If the sale does proceed, "it really must be in a way that doesn't impact on the potential for a commercial trade to develop," he said.