Live ban lifted – now come the aftershocks

The Australian government via agriculture minister, Joe Ludwig, lifted its ban on live cattle exports to Indonesia on Wednesday night (06.07.11).

The minister’s statement said that “These strict new conditions have been written into all export permits,” speaking of the stricter regulations that are to be imposed on industry participants, continuing that “require exporters to trace cattle from properties, onto vessels, into feedlots and into abattoirs that meet agreed international standards.”

However, in the short term Jakarta said it may not allow any new imports for up to three months as the Indonesian Government refused last week to reissue import permits for the next three months, citing the uncertainty that the ban had placed on them.

Whilst the overwhelming majority of the existing exporter and importer partnership chains already managed this level of detail within their logistics, the new rules do mean that now all exporters will be required by law to report the full details of the end to end chain of logistics from berth to berth as well as the feedlot and contract growers all methods of transportation usedand the sites of all slaughterhouses the cattle are delivered to. The governement is calling this “supply chain assurance”.

One such example is agricultural products distributor, Elders, owns and controls it’s own supply chain from the Australian to Indonesian end. The Elders feedlot and abattoir operations in place in Indonesia (such as their Bogor plant) already operate above those levels expected by International agreements and Australian practice, a feat achieved by having spent 10 years investing in infrastructure and training.

The blanket ban has meant that Elders has issued a statement to the ASX and that they believe that the trade ban is expected to cost it between $4.4 million and $7.3 million once all accounts are finalised.

To top this messy cake with the sour cream, while Indonesia has previously claimed it will still aim to import the full 500,000 head of cattle from Australia this year, they will in most likelihood substantially cut the number of cattle it sources from Australia when it re-assesses its import quota for next year. The Agricultural office has already stated that it would recommend to the Indonesian government a dramatic cut in live cattle imports and also a reduction in imports of chilled boxed-beef sourced from Australia next year, citing a range of reasons, including a loss of faith in the certainty of product availability.

Regardless of how fast this can be resolved, the Northern Territory Cattlemen’s Association said that producers could get desperate enough to shoot their beasts as the wet season approached. This is a notion supported by MP Parkes who iterated that “the wet season is hurtling towards them at a rapid rate, that’s something they have no control over,”

There is backlog of approximately 100,000 cattle across northern Australia, some are already reaching export weight limits and those that are still suitable are rapidly reaching that mark. Many businesses and families are going to be doing it very tough over the next twelve months and beyond.

The long term financial, social and cultural repercussions of this situation will be felt across both countries for the next few years.