Presenters highlighted that all parts of Indonesia’s economy are struggling to deal with impacts of COVID-19 and the cattle and red meat sector is no different. Around 750,000 people, mainly small businesses, are directly and indirectly involved in livestock production in Indonesia – almost double than that in Australia. A panel including Mr George Hughes, Counsellor Australian Embassy Jakarta, Mr Ashley Manicaros, CEO Northern Territory Cattlemen’s Association, Ms Dayu Ariasintawati, ex-CEO Giant Green Livestock and Mr. Jason Hatchett, President Director PT BEC Feed Solutions. Moderatored by Valeska, the MLA Indonesia’s Country Manager, they discussed options for recovery of the sector.
Indonesian industry update
At the beginning of discussion, David Goodwins, the M&E Specialist at the Partnership conveyed that cattle prices in Australia are historically high as the industry restocks after several years of drought and floods. The Australian dollar is high against the Indonesian Rupiah - currently IDR 1 million buys around $93 Australian dollars (down from around $101 before COVID). Many feedlots are currently at only around 30% capacity and expect to make losses this year. Some businesses will not survive.
Imports of live cattle will be down about 25 percent on last year by the end of the year, although projections for total numbers for 2020 remain reasonable at 450-500,000. At the end of August there were 335,000 imported cattle compared to 454,000 at the same time last year.
While Indian Buffalo Meat (IBM) was not imported in the first half of the year due to export restrictions in India, about 40,000 tonnes have entered the market since June. The importation of IBM is expected to continue to put downward pressure on beef prices in markets.
Abattoirs are still experiencing a drop of 20-30% in processing compared to the same time last year reflecting the slower demand. The importation of boxed beef from Australia was only down slightly compared to the first 7 months of last year but dropped significantly in August. Beef imports to Indonesia are at 38,744 tonnes until September, down about 12% from 43,745 tonnes last year.
Demand for beef in Jakarta during August-September has been reportedly stable after declining 20-30% in the previous period. The average price of beef in the wholesale market at around 100,000-105,000 Rupiah and at around 115-120,000 in retail markets. Buffalo meat is available in the market at around 80,000 Rupiah. The shift away from wet markets to modern markets and online sales continues due to the emphasis on social distancing and fears of COVID 19 outbreaks.
Innovation and Collaboration as the Strategies to Recovery
The discussion examined the current situation in the livestock and beef sector, the outlook for 2021 and what short- and medium-term strategies governments, businesses and producers have in place for recovery.
The panel members presented options to make the industry more competitive, with a focus on technology and innovations to improve efficiencies along the supply chain. All agreed that there is a need to think differently, to be open to new ideas and to invest in R&D along the supply chain, if the industry is to successfully counter the many external factors impacting industry profitability.
Mr Jason Hatchett, President Director PT BEC Feed Solutions, stated that Indonesia’s red meat and cattle sector industry has always experienced highs and lows, but over the past few years the lows have dominated. “It is essential to structure businesses appropriately to survive as the current business model is unsustainable. There is a need to think differently and to focus on what we can control. Analyse these factors on a divisional basis within your company,” stated Mr Hatchett.
Automated feeding technologies was provided as an example that could drive cost savings as well as collect valuable data that improves productivity.
Ms Dayu Ariasintawati, ex-CEO Giant Green Livestock, emphasized on understanding the market as the key of success. She noted that firms need to keep track of changes in consumer behaviour and determine how these can be used to their advantage, with an increase in online beef sales a prime example. “However, we don’t really know if the behavioural changes we are now experiencing will be permanent. It is possible that people will revert to pre-COVID behaviour in the future. Wet markets may return to pre-COVID levels of business, online sales may decline and street vendors may reach their normal levels of activity,” said Ms Ariasintawati.
Moreover, the panel agreed for the uncertain future, more collaboration is required between Indonesia and Australia alog the supply chain. Not only to support the Australian sellers as well Indonesian feedlots, but also sharing of knowledge and capacity building between the two countries.