Price, convenience drive meat purchases in Indonesia

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PRICE and convenience is dominating meat purchase decisions in Indonesia, Australia’s key live cattle customer, market analysts report.

Live export volumes to Indonesia are down 15 per cent but Australia’s boxed beef exports to Indonesia are steady.

In it’s just-released state of the industry report update, the Indonesia-Australia Red Meat and Cattle Partnership has warned the introduction of new stocking density shipping regulations may partially offset the benefits of tariff reductions for Australian cattle that have come into force this year.

The new regulations, due to start next month, mean between seven and 15 per cent less stock on voyages.

The report says the Indonesian industry adds approximately $550 per head of imported Australian cattle, through fattening and processing, which equates to $370 million to the Indonesian economy, and employs over 100,000 Indonesians in the feed, logistics, fattening, processing, and selling sectors.

It says the 5pc reduction in tariffs for more than half a million Australian steers and the zero tariff on female live cattle negotiated in the bilateral economic partnership between Australian and Indonesia had gone a long way to helping to mitigate the high price of Australia cattle this year.

Light steers for Indonesia are still attracting $3.55 a kilogram out of Darwin and $3.40 ex Townsville, historically strong prices.

The industry update says both feedlots and abattoirs in Indonesia have experienced profit squeeze this year due to increased input prices and additional costs and reduced productivity on account of measures to protect staff health during the pandemic.

It says the meat processing industry had diversified in response to emerging consumer requirements and price points – an example being mixing beef, chicken and buffalo to produce new processed products.

Rabobank’s Singapore-based analyst Ben Santoso said price was a major red meat purchase driver in Indonesia now because of income uncertainties, along with convenience because people cannot go far with limited public transport, nor do they want to visit crowded places.

Beef was about three to four times the price of dressed chicken per kilogram in the wet markets, depending on carcase parts, he said.

Overall beef had probably maintained its price level, but volume had dropped, Mr Santoso said.

“Cheaper beef cuts and offal is consumed more in foodservice than in retail and the decline in foodservice traffic has so far not been offset by any increase in more expensive cuts in supermarkets,” he said.

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The story Price, convenience drive meat purchases in Indonesia first appeared on Farm Online.

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