The Partnership has long recognised that objective industry information is key to effective investment planning and policy development within the red meat and cattle sector. With this in mind, the Partnership has published its first annual Joint State of the Industry (JSOI) Report for 2019 and a July 2020 Update. The JSOI Report provides an annual assessment of the bilateral trade in live cattle and beef products between Australia and Indonesia and examines factors that affected investment, trade and consumption.
The 2019 JSOI Report highlighted relatively strong export sales of Australian feeder cattle to Indonesia throughout 2019 aided by an ongoing drought across much of northern Australia that led to destocking. The report also noted the ongoing financial challenges faced by Indonesian feedlots due to increasing production costs, flat beef prices and the import of low-cost Indian buffalo meat. Feedlot owners did however obtain some relief from the relative weakness of the Australian dollar throughout 2019 and comparatively low feeder cattle prices.
The July 2020 JSOI Update covers a very different operating environment from that experienced in 2019. Drought breaking rains in Australia in early 2020 encouraged Australian farmers to restock, resulting in cattle shortages and price increases. This, together with a significant appreciation of the Australian dollar against the Rupiah, led to a 30% increase in landed cattle prices. Australian live cattle exports dropped by 15%, as Indonesian feedlot owners and traders took a ‘wait and see approach’ to AUD/Rupiah currency fluctuations, cattle prices and the impact from a planned import of 170,000 tonnes of Indian buffalo meat.
The 2020 Update also highlights a change in Indonesian consumer purchasing behaviour due to the COVID-19 pandemic. Many consumers switched from traditional wet markets to supermarkets and on-line shops. Online beef purchases increased by over 300% with many traders opening online meat stores and partnering with delivery companies such as Gojek. Many smaller operators are now selling products through social media apps such as Facebook, Instagram and WhatsApp.
The Update notes an unpredictable short to medium term outlook for the bilateral trade due to the interplay of various economic factors, all driven by the COVID-19 pandemic. It concludes with a more optimistic longer-term outlook, driven by strong and enduring Australian and Indonesian government and industry relationships that are ideally placed to leverage the unique complementarities of the two industries, an expanding Indonesian beef market, and very importantly, IA-CEPA, which has already seen the elimination several tariff and quota requirements.
For a copy of the full Joint State of the Industry Report 2019 and 2020 Update go to https://redmeatcattlepartnership.org/publications