Aussie beef bound for China, Vietnam

A backdoor trade in Australian beef between Vietnam and China is booming as Indonesia tinkers with its cattle import rules.

Indonesia is moving to scrap quotas in favour of a price trigger to control cattle imports.

The new policy is aimed at bringing down beef prices and a virtual admission that Jakarta's policy of developing a self-sufficient beef industry has failed.

Trade Minister Gita Wirjawan said the retail price reference would be set at 76,000 Indonesian rupiah ($7.60) a kilogram. Cattle imports would be allowed when the retail price was higher and restricted when it was lower.

WA exporters are taking a wait-and-see approach but have repeatedly warned that the trade cannot be switched on and off.

International Livestock Exporters managing director Mike Stanton said it was unclear how the new system would work.

Mr Stanton said there were no permits for exports to Indonesia this month and none available until October under the existing quota system.

Indonesia Institute chairman Ross Taylor said a price-regulated import system was "fraught with danger" and senior officials privately acknowledged it could not work in the long-term.

Mr Taylor said the issue of self-sufficiency remained politically sensitive in the countdown to next year's elections but there was potential for cattle exports from Australia to return to the 2009 high of 773,000 head by the middle of next year.

He said huge growth could come from local demand and the potential for joint ventures to process cattle in Indonesia for export to other countries.

Indonesia - where beef prices hit 140,000 rupiah/kg this year - Thailand and Vietnam have eaten into their herds recently.

Australian exports to Vietnam increased from 1440 head in 2011-12 to 15,900 in 2012-13 with big numbers of the cattle slaughtered in Vietnam and sold to China.

Exports to Malaysia, a market traditionally supplied by Vietnam and Thailand, grew from about 20,000 to 38,500 head.

Australia has no framework in place to export slaughter cattle to China but boxed beef exports grew tenfold in 2012-13 to 92,279 tonnes.