Ramadan cattle supply at risk

Four weeks and counting of suspended live cattle exports is taking their toll both on Australian cattle stations and in the wet markets of Indonesia, with the financial impact being felt throughout the supply chain.

The Indonesian Government’s recent announcement that it would not issue cattle import permits for the third quarter (July to September) of 2011 has unnerved the industry; however, once an agreement to re-open trade has been reached importers will once again be able to apply for permits.

Emanuel Exports director Mike Stanton said the message he was getting was that importers believed everything was on hold while the ban was in place and they were not looking for alternative cattle supplies.

He said the situation now was that uncertainty over cattle supply and the upcoming peak demand period for beef during Ramadan celebrations, which start on August 1, meant cattle already in Indonesian feedlots were being held onto.

“Local cattle prices are going up; the uncertainty over if new import permits will be ready for Ramadan means importers are now holding onto cattle and only a few are being processed through limited works, ” Mr Stanton said.

Mr Stanton said he was not getting the message importers were moving away from Australian cattle, instead they were waiting for the trade to be re-opened before they made an application to the Indonesian government for new import permits to be issued.

Reports other importing countries were now offering lower prices for Australian cattle has caused further pain for northern cattle producers.

Mr Stanton said he was getting a lot of inquiries from importers interested in buying cattle previously destined for Indonesia.

He said that while prices for cattle heading to Egypt were lower than what would have been paid for cattle had they been exported to Indonesia, this alternative would put a floor in the market.

Finding alternative markets for northern cattle is an option to start moving cattle now grid-locked by the ban on exports to Indonesia; however Mr Stanton warned these markets would not happen immediately.

He said the two main alternatives were Malaysia and Egypt, with Egypt already having a closed system in place which guaranteed suitable welfare conditions for the slaughter of Australian cattle.

Expansion of cattle numbers going to Egypt could also provide a long-term alternative with a second closed system abattoir now coming on line.

Mr Stanton added that the Federal Government’s draft paper presented to the Indonesian Government by Federal Agriculture Minister Joe Ludwig expected exporters to take on much of the reporting and trace-back assurances.

The working paper was based on only allowing Australian cattle to be exported to abattoirs’ which operated at World Organisation for Animal Health (OIE) standards and provided a ‘traceable’ and ‘closed system’.

“It is very onerous on the exporter, not so much the importer, ” he said.

“The proposal is that exporters have to have a supply chain in place which is up to OIE standards.

“Exporters can develop supply chains with as many abattoirs as they like as long as they can guarantee they are operating at OIE standards.”

Mr Stanton said despite the extra pressure to ensure the entire supply chain, exporters were signing up to make sure cattle would be traceable from export to point of slaughter.

He said presently there was a lot of work going into offering training at Indonesian abattoirs to ensure they operated at OIE standards.

“It’s not just a matter of going in and making changes, ” he said.

“We have our importers going into private butchers and slaughter works to help get these facilities to OIE standards, Government-owned facilities are a different situation however.”

Mr Stanton said that given the trade was re-opened under these conditions the number of cattle likely to be exported to Indonesia during 2011 would be limited compared to previous years.