Agriculture Minister Barnaby Joyce is pushing for negotiations over a proposed new rule disrupting the live cattle trade to Indonesia to be resolved as quickly as possible, warning any interruption to trade will hurt exporters, importers and Indonesian consumers.
No cattle were exported to Indonesia in September due to permit delays amid negotiations over a proposed new policy requiring importers to bring in one cow for breeding for every five cows to be fattened for slaughter.
The previous month 71,458 cattle were imported to Indonesia, while 51,255 were imported in July.
The unexpected new rule shocked the beef industry and led to cattle being stockpiled in feedlots in Australia and exporters having to absorb the massive costs of ships sitting idle in Australian ports.
Indonesia was Australia's largest live cattle export market in 2014-15, taking 746,193 cows valued at $601 million.
Although 19 companies have now been issued with import permits and the first ship left Townsville at the end of September, the number of cattle imported in the final trimester of the year is expected to be significantly reduced.
"The government is conscious that many Australian producers and exporters … need to see this situation resolved as quickly as possible," a spokesperson for Mr Joyce said.
"Unfortunately any interruption to the trade will have cost implications for Australian exporters, for Indonesian importers and unfortunately for Indonesian consumers."
The spokesperson said the agriculture and foreign affairs departments had been in "constant communication" with the Indonesian government over the past fortnight.
"The minister is in contact with his counterpart in Indonesia as is the Australian minister for trade, to seek a timely resolution on this matter."
Australian Live Exporters' Council chairman Simon Crean met Indonesian Trade Minister Enggartiasto Lukita in Jakarta on Monday seeking clarification of the new policy.
Mr Crean said Mr Lukita had indicated the new breeder rule did not apply to individual consignments of cattle but would be tallied at the end of a period.
The two countries had agreed to establish a working party to assist with implementing the new policy.
Mr Crean said fattening cattle for slaughter and breeding cattle were entirely different operations and the breeding program would take time to establish.
"We have pointed out that all of Australia's experience and breeders generally globally is that feedlots do not make good outcomes for breeding," Mr Crean said.
"And therefore what has got to happen is we have to find the land."
Mr Lukita said the Australian Live Exporters' Council had told them breeding was difficult. "But if we don't start today, when will we start? I said we are responsible for ensuring our cattle population is increasing."
Australia is now the only country to export live cattle to Indonesia.
But Mr Lukita said he told the delegation Indonesia was also exploring importing live cattle from Brazil, Mexico and Spain to ensure there would be no shortage of supply.
"I told them the price in Brazil is far lower," he said. "[Importers] will go away from a market in which the regulation is complicated and the price is too high."
Asked if Australia would lower the price of cattle given that Indonesia was exploring opening up its market to other countries, Mr Lukita said: "I don't know. But I gave them hints about us having alternatives, they understand already."
But Mr Crean said the price of beef was up to the market: "We can't guarantee the price will come down."
Uncertainty surrounding the issue of import permits also had an impact on cost.
"If the cost of shipping is higher because the vessels have to be hired at the last minute, somewhere or other someone has got to pay for that," he added.
Mr Lukita said 80,000 cattle would arrive from Australia before the end of the year. He said none of these would be required to be for breeding, in order to give companies time to adjust to the new policy.
Asked if 80,000 cows would be enough, Mr Lukita said: "More than enough."
He said an audit would be undertaken at the end of 2018 to ensure importers were complying with the new breeding rule.
Meanwhile, Gina Rinehart's Hancock Prospecting issued a statement on Tuesday detailing the virtues of her $365 million offer with Shanghai CRED for S. Kidman and Co – Australia's biggest cattle empire, hoping to counter any concerns about foreign ownership.
with Karuni Rompies
