Beef exports to Indonesia double after quota restrictions removed

New Zealand beef exports to Indonesia more than doubled over the past year as the trade recovers from beef import quota restrictions imposed in 2011.

The volume of New Zealand beef exports to Indonesia rose to 15,384 tonnes in the year ended June 30, from 6,516 tonnes a year earlier, the Meat Industry Association of New Zealand said in its 2014 annual report. The value of beef exports to Indonesia jumped to $76 million from $34 million.

Indonesia ended volume-based import quota restrictions in September 2013, removing an impediment that had crimped New Zealand's beef exports to the country since early 2011. Meantime, new price-based restrictions haven't yet been triggered, helping Indonesia overtake the Philippines and regain its place as the largest market for New Zealand beef in South East Asia.

Still, the association remains concerned that the new price-based rules could hurt New Zealand exports.

Under the Indonesian system, meat and live cattle imports are allowed only when domestic beef prices increased by more than 15 percent from a specified parity price, initially set at 76,000 Indonesian rupiah, about US$6.60/kg.

"Given the weakening of the Indonesia rupiah against all major currencies, and the increasing competition to purchase protein worldwide, the specified price has not yet been threatened in Indonesia," the association said.

"There are, however, still questions about how this policy will operate in the long term, including how often the parity price will be set and how it will be determined, what incentives will be offered to industry to bring the price down, what would happen in the event of imports increasing but prices not changing and how long new permits would be valid for," it said.

Indonesia still has regulations in place that prevent the import of certain cuts, despite the same cuts from domestic animals being available for sale, the association said.

In May, New Zealand and the US lodged a complaint with the World Trade Organisation about import restrictions and red tape in Indonesia. The dispute is currently at the consultation stage, the association said today.

New Zealand and the US had previously teamed up to initiate legal proceedings against Indonesia via the WTO in August last year but that complaint didn't proceed beyond consultation after Indonesia made changes to its rules, requiring a new application to be made to the WTO.

In the year through June, Indonesia was New Zealand's sixth largest beef market for volume and value.

New Zealand's beef trade with Indonesia slumped after the volume-based quotes were enforced in early 2011, with the intention of the country becoming self sufficient. Instead, demand for animal proteins coupled with the lack of overseas supply caused prices to soar.

Exports of New Zealand beef tumbled to 8,344 tonnes in calendar 2012, from a peak of 36,926 tonnes in 2010 before the quotas were enforced in early 2011. So far this calendar year, in the eight months through August, New Zealand has exported 11,460 tonnes, already surpassing the 9,642 tonnes total for calendar 2013.

(BusinessDesk)