Indonesia-Beef Producers.
INDONESIA-Beef producers remain lukewarm to the government’s call to lower beef prices, saying that doing so will not necessarily make it more affordable to the public.
Instead, the Indonesian beef producers and lot feeder association, or Apfindo, is asking the government to help increase domestic beef output to help relieve price pressure.
Earlier this month, the government announced a plan to lower beef prices, with President Susilo Bambang Yudhoyono saying prices could be reduced following the decrease in transportation costs.
Minister of Agriculture Anton Apriyantono said that a price cut would be justified given comparable drops in other countries amid decreasing global demand. He also said that one way to bring prices down would be to relax the trade and health restrictions that have blocked Brazilian beef from entering the country.
But Teguh Boediyana, Apfindo’s executive director, said the government’s call to lower beef prices would not be feasible because it did not reflect market conditions.
"If we had enough supply, prices will be lowered by the market," Teguh said last week.
At present, he said, there were two main problems that made the meat inaccessible to most. One was the low buying power of most Indonesians, which made them prioritize cheaper carbohydrates in their diets over protein.
Based on data from the Indonesian Meat Importer Association, or Aspidi, Indonesians consume an average of 1.7 kilograms of beef per capita annually. That level is far less than Australia and Brazil, the two countries from which Indonesia imports most of its beef. The average Australian consumes 35 kilograms of beef per year, and the average Brazilian consumes 75 kilograms.
Teguh said that the second problem that drove prices up was the price of beef imports. Despite low per capita consumption, Indonesian beef output still falls short of domestic demand, necessitating imports of relatively expensive beef.
Given these factors, Teguh is urging the government to focus more on raising cattle domestically instead of taking shortcuts by opening beef import licenses from countries such as Brazil.
"The greater the supply of beef in the market, the more affordable the price would be without the government having to decrease the price," he said, adding that boosting domestic supply would require serious time and effort.
Thomas Sembiring, chairman of Aspidi, said there was cause for concern because beef imports have been on the rise.
"In 2000, Indonesia imported 20 percent of its total beef consumption, and that increased to 35 percent in 2008," Sembiring said, adding that in 2008, Indonesia imported about 70,000 tons of beef, mostly from Australia and New Zealand.
Like Teguh, Sembiring said that the government should focus more on increasing domestic output than increasing imports.
Beef prices in Indonesia vary depending on where the meat is sold and its quality. Medium-quality, locally produced beef currently costs about Rp 55,000 ($45) a kilogram; imported beef is usually more expensive..
"The minister of agriculture once asked me how to decrease the price of imported meat to
Rp 50,000 a kilogram," Sembiring said. "I told him the price followed market factors and could not be fixed."
He said that beef traders imported beef at a cost of Rp 45,000 to Rp 48,000 a kilogram.
The meat usually passes through more than two levels of distributors before it reaches consumers. "The retailers at present sell it for Rp 60,000 to consumers," Sembiring said.
