Indonesia's president Joko Widodo is aiming for self-sufficiency in a basket of commodities, including beef, to maintain domestic price stability, make staples affordable to consumers, and support the livelihoods of local farmers. In November 2014, a month after he was elected, Widodo announced a target for beef self-sufficiency within five years but was forced into a climbdown several months later, saying in June 2016 that the country was on track to meet its targets for beef in nine to ten years instead, by 2025.
The Indonesian Cattle and Buffalo Farmers Union (PPSKI) defines beef self-sufficiency as needing to import less than 10 percent of the country's total demand.
How much has Widodo achieved in beef self-sufficiency and affordability today?
2015: IMPORTS = 24 PERCENT
Widodo had a good 2015, his first full year in office, when the beef numbers went in the right directions: imports went down 18.5 percent and domestic production shot up 17.5 percent.
The proportion of imports to total consumption dropped from 31 percent in 2014 to 24 percent in 2015.
2016: IMPORTS = 32 PERCENT
Things did not go to plan in 2016 when imports surged 40.5 percent and domestic production shrank by 8.8 percent.
The proportion of imports to total consumption increased to 32 percent from 24 percent in 2015.
2017: PROJECTED IMPORTS UP TO JUN = 41 PERCENT
According to the ministry of agriculture's forecasts, Indonesia is set to move even farther away from beef self-sufficiency in 2017. For the first half of the year, forecasted numbers show imports make up 41 percent of total consumption.
2016 was a high beef import year as the sector faced a shortage of local cattle.
In May this year, Ketut Diarmita, general director of livestock and animal health at the ministry of agriculture told Salaam Gateway Indonesia needs 42 million cattle from its stock of 5.6 million female cattle in order to become beef self-sufficient by 2025. To overcome the shortage of local livestock and reduce imports of cattle for breeding, the government is developing artificial insemination to increase breeding productivity.
At this point, the key challenge facing more local production is scaling up smallhold farmers, which have lower productivity and lower quality beef in comparison to imported alternatives.
The main focus is boosting the supply chain, and the government continues to work on expanding cattle farms as well as lowering farmers’ costs, initiating projects such as Camara Nusantara I, Indonesia’s first livestock vessel that set off in September 2015, which transports livestock from large cattle breeding area East Nusa Tenggara, to Jakarta.
Indonesia's beef supply chain is a complex web of stakeholders from farm to fork. They include: Farmers - Feedlot operators – Logistics - Breeders - Livestock markets - Traders - Abbatoirs - Wholesale Meat Buyers - Domestic Retail
Beef is a price-sensitive market, and its supply affects retail prices and hence affordability for the consumer.
Since Widodo's first day on the job, October 20, 2014, until yesterday July 18, 2017, the price of beef increased 16.7 percent, from 99,882 rupiah per kilogram ($7.50) to 116,563 rupiah per kilogram ($8.75), according to the ministry of trade.
Attempting to control prices, in August 2016, the government announced price floors and ceilings on seven staple foods: rice, soy, sugar, chili, shallot, beef, and buffalo meat. A month later the price ceiling of 80,000 Indonesian rupiah (around $6) per kilogram of frozen beef and 120,000 rupiah ($9) for fresh beef came into effect. The price was to be rolled outwards from Jakarta and Greater Jakarta where beef prices are traditionally the highest.
At this point, Widodo's government had taken nine months to respond to beef prices that had already climbed 16 percent to hit $8.79 per kilogram in July 2016 from $7.58 in September 2015, which was the lowest price since Widodo took office.
As part of its attempts to bring down beef prices, the government announced in June 2016 it would be importing buffalo meat from India, which is cheaper than beef. However, this is now under review following the Constitutional Court ruling on February 7 to uphold a law that requires zone-based meat imports from countries prone to foot and mouth disease (FMD) be accepted only during “urgent conditions” but with “maximum security standards.” India remains prone to FMD but has disease-free zones.
However, the cheaper buffalo meats from India have not had much of an impact on prices.
In the long-run, prices can only be reduced with a productive and streamlined domestic cattle and beef production sector.
(Additional data reporting by Yosi Winosa)
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