The combination of production, consumption and price factors culminate to forge a dynamic trade sector for cattle, beef and offal. Indonesia has a large import sector relative to domestic production, and imports increased rapidly over the 2000s for both cattle and beef. However, the trade is strongly influenced by trade policy so is given some attention below.
Following broader liberalisation measures and accession to trade groups (including WTO in 1995), Indonesia adopted a liberal trade policy to cattle and beef. No tariff is applied to the very small number of breeders that are imported (but can require a certificate of pedigree). Feeder cattle are also imported duty free, subject to the requirement of the maximum weight of 350 kg (although this can be flexible and slaughter cattle are sometimes imported). A 5% tariff is imposed on imported beef and offal. Under the ASEAN, Australia, and New Zealand Free Trade Agreement tariffs on bovines, beef and beef offal are to be eliminated or phased out.
With the introduction of PSDSK in 2008. Indonesia’s trade policy became increasingly protectionist. This was accentuated when the Australian government banned the export of live cattle to Indonesia for a month in 2011 leading into the peak consumption period of Ramadan due to animal welfare concerns. A range of policy instruments are used (stricter enforcement of the 350kg limit, a 5% tariff was introduced for cattle in 2012) but by far the most important was restrictions in the allocation of quarterly quota and import permits. Rising beef prices particularly after 2012 (Figure 7), protests and lobbying from consumers and industry (butchers, feedlots and importers) and institutional dynamics (especially between the ministries of trade and agriculture) led to more relaxed but still uncertain trade policy settings. Indonesia announced that it would release quota based on beef prices relative to a “reference price” (which seems to have increased over recent years) and saw increased permit allocation, but also uncertainty such as when permits were withheld leading into Ramadan in 2015. Australia is lobbying for annual quota rather than quarterly allocations. Trade policy has forged live cattle and boxed imports volumes in volumes shown in Figure 9.
Indonesia has previously only allowed imports from countries declared free by the OIE of FMD including Australia, New Zealand and Uruguay. Reportedly to diversify supply, the Indonesian parliament introduced amendments to the Animal Health law to allow imports from disease free zones, including those in Brazil and possibly India. The amendments were rejected in 2010 but reintroduced in 2014 and press reports suggest that government may be taking measures to implement introduce the trade, including the establishment of island quarantine facilities (Nason, 2015).