ABC News Rural By Lydia Burton – High cattle prices continue to make difficult trading conditions for Australian live cattle exporters, as Indonesia looks to cheaper forms of protein.
While Indonesia remains the largest importer of Australian stock, exports have been declining over the past 12 months.
From January to March this year 60,000 fewer cattle left Australian shores for Indonesia, than in the same period last year.
Northern Territory Livestock Exporters Association CEO Stuart Kemp puts that down to the high cattle prices in Australia.
“There is a lot of pressure [from Indonesia] on getting that price down,” he said.
“Butchers and retailers haven’t been able to compete price-wise with other products like Indian buffalo meat.”
Mr Kemp said turnoff from feedlots, as well as kill numbers in Indonesia, have been reported to be down by as much as 60 per cent in some areas, which has meant less demand for Australian cattle.
High cattle prices put pressure on relationships
Juxtaposed aims for importers and exporters are putting pressure on relationships, as Indonesia continues to work to find cheaper proteins, while Australia’s tight cattle supply is forcing prices up.
“A lot of work is being done to keep both sides engaged to maintain the goodwill of the relationship and that will continue,” Mr Kemp said.
“[Indonesia] has fixed the permit cycle… to a rolling 12 month cycle [rather than three or four month permit cycles] to try and improve the buying power and capacity to fill orders at the right price, as well as opening up the specifications [increasing the weight limit from 350 to 450 kilograms].
“But ultimately cash is king and price is what dictates whether the trade can function or not.
“Let’s hope we are wrong, let’s hope trading conditions are favourable and orders keep coming, but time will tell.
“Price is the main determining factor on demand in those South-East Asian markets.”
Mr Kemp says the recent period has been the toughest time for exporters since the live export suspension in 2011.
“This has been like a drought, it has crept up and slowly worn away at people.
“Those difficult trading conditions have gone on and on and on and like a drought you don’t know when it is going to improve or when it is going to change,” he said.
Despite the tight cattle supply and high prices, exporters are still filling vessels, with five in the port of Darwin this week, including the Ocean Drover which loaded 5,400 head in Broome and continued to Darwin to fill the ship.
“There has been a lot more consistency in the number of vessels that are going,” Mr Kemp said.
“March into April saw numbers start to improve and that got it up to an OK level, short of being good, but the trend is heading in the right direction.
“Numbers are still a long way short of where we should be for this time of year, but the upside is we have just had a fantastic wet season in the NT and there are a lot of positive producers and that is a huge plus and platform to build on.
“The nature of the trade is to keep going to find a way to keep the vessels coming, find a way to negotiate a deal and keep the cattle moving.”