Strong rumours are doing the rounds that Indonesia may completely remove live cattle import quotas from Australia.
More when there is more!
The government would set a parity or “normal” price for beef as a benchmark to assess the necessity for imports, Trade Minister Gita Wirjawan said on Friday in Jakarta.
Meat and live imports will be allowed only when domestic beef prices rise by more than 15 percent from the parity price, a move that will still support the local livestock industry, according to Gita.
“The price mechanism as a trigger to import or not to import is very important. But we should first determine the parity price, which should match our aspiration to curb inflation and maintain price stability,” Gita told reporters at his office.
The ministry was working on the policy framework, which would be ready in the next two months, he added.
Indonesia, the world’s fourth most populous nation, has seen demand for beef surging rapidly, outpacing the capacity of its domestic livestock industry to meet demand.
To support its target of attaining self-sufficiency in beef by 2014, the government curbed imports and reduced its import quota for live cattle by more than 30 percent last year and another 30 percent this year.
In addition, it cut the beef import quota by almost 60 percent last year and by 6 percent this year.
It has set an overall live cattle import allocation of 267,000 head for this year, with a beef import quota of 32,000 tons, 20 percent of which are prime cuts.
The planned measure will follow on the heels of recent changes in the import arrangements for horticultural products as Indonesia grapples with mounting pressure from trade partners who regard its import procedures as troublesome.
In January, the US lodged a complaint with the World Trade Organization (WTO) as it considered Indonesia’s trade measures “restrictive” and Indonesia’s “complex web of import licensing requirements” unfairly limited US exports.
The US has advanced to the Dispute Settlement Body of the world trade governing body, which has already set a panel to resolve the issue.
In the meeting of the WTO’s Council for Trade in Goods last week, the US reiterated its concerns about “a complex web of opaque trade restrictions in Indonesia affecting agriculture” in addition to energy and consumer goods.
However, Gita refuted speculation that the elimination of the beef and live cattle import quotas was mainly to comply with demands from trade partners, saying that the reform was necessary to reduce domestic prices. “What we’re doing is to improve efficiency and licensing transparency to help address the problems at the WTO,” he said.
For the rest of this year, the government would permit the unlimited importation of live cattle for “as long as possible” to attain price stability, Gita said. Earlier on Friday, Australia said Indonesia was boosting live cattle imports from that country by 25,000 head over the next three months, Reuters reported.
The move was aimed at maintaining domestic beef prices at between Rp 75,000 (US$7.40) and Rp 76,000 per kilogram, Gita said. That would be 20 percent lower than the national average price of Rp 93,000 per kilogram.