Indonesia a victim of its own war on Australia's live-cattle export trade

WA’s respected and insightful Buddhist leader, Abbott Ajan Brahm once said that the problem with seeking revenge is that you become a ‘victim of your own war’, in that you can often suffer as much ‘damage’ as the person to whom you are directing your revenge.

It was good advice and something we all, at sometime, have been guilty of intentionally forgetting.

It is also ironical advice given that Ajan Brahm is highly admired and respected in Indonesia, where he holds many seminars and retreats, at a time when Indonesia’s agricultural officials are seeking and carrying-out revenge on Australia’s cattle industry for our appalling handling of the live-cattle export crisis in 2011.

As the Indonesian government announced further reductions in the quota for live-cattle from Australia, David Farley, managing director of Australian Agricultural Company (AAC) says the action by Indonesia will result in even greater bankruptcies and job losses for an industry already in serious trouble following our government’s impulsive decision to ban the export of live cattle to Indonesia.

The impact of these latest cuts will be dramatic. Prior to the cattle ban being imposed last year, Australia exported in excess of 520,000 head-of-cattle to Indonesia each year. Next year the revised quota will be reduced to just 230,000 cattle annually.

Indonesia had every right to feel aggrieved over this issue. Beef makes up a very important part of the Indonesian diet, and to have the Australian agriculture minister announce a total ban on the export of live-cattle to Indonesia without any consultation with our near neighbours sent shock waves through the entire supply chain and left Indonesian officials and ministers embarrassed and seething.

As a result, Indonesia announced that it intends to become ‘self sufficient’ in live-cattle that can be used for slaughter. This is a noble objective but it is also not achievable, and nor is it sensible.

Indonesia has some of the finest horticulture land in the world; rich soils with plenty of rainfall along with warm and humid conditions that allows its people to grow a huge variety of crops and effectively become Asia’s food bowl.

It does not make any sense to turn over pristine food growing land for the purpose of breeding cattle. Those in the cattle industry have known for years that, as the outgoing WA trade director, Martin Newbery said last week, “Australians are the best cattle breeders and Indonesian’s, the best cattle feeders.” He is right.

For this reason, to have cattle bred in Australia, where we have the land, infrastructure and expertise, then export them to Indonesia where they are placed in feedlots and ‘bulked-up’   not only makes sense, it is almost the prefect supply structure whereby all parties win.

The Australian live-cattle trade should be booming on the back of Indonesia’s strong economic and population growth, with the industry being used as a model for the development of other major agricultural partnerships between Australia and Indonesia. Instead, we now have a relationship that is untrustworthy and fractured and where Indonesia seeks to ‘payback’ Australia for what it did to a trusted friend, whilst simultaneously harming its own supply network and inflicting shortages and increased prices on its own community.

The price of beef at the ‘wet markets’ within Indonesia has effectively doubled since the quota reductions in Australian beef as Indonesia struggles to meet demand from its internal supplies.

So why does Indonesia now want to reduce the quota of Australian cattle even further?

The answer is complicated but includes Indonesia’s desire to be self-sufficient in beef supply and thus ensure Australia can never again hold Indonesia ‘to ransom’ by cutting-off a major food supply source without warning.

But there are other more darker reasons behind Indonesia’s actions, including the rise of nationalism, and a distrust in some quarters of Australia’s agenda in developing the much lauded Comprehensive Economic Partnership Agreement (CEPA) that will provide both countries enormous opportunities to develop far greater business and trade opportunities.

What is even more disturbing however, is that Australia’s agriculture minister, Joe Ludwig seems helpless in addressing this progression into mutual economic self-harm at a time when Indonesia-Australia government relations are said to be at an all time high.

Within Indonesia, the internationally popular president Susilo Bambang Yudhoyono is nearing the end of his term. This is unfortunate timing for both countries as SBY-as he is effectionally known-has a deep and warm respect for Australia, but internally Indonesians see SBY as a president who has already ‘run his race’ and perhaps what we are now seeing is a small taste of things to come as Indonesia heads towards electing a new president in 2014.

In previous commentary on Indonesia-Australia relationships I have highlighted the enormous opportunities that exists for our two countries to work together to build extensive and mutually beneficial partnerships as we move into ‘The Asian Century’.

The live-cattle export industry should have been a glowing example of how we can develop these partnerships, yet sadly this industry has become an example of what can go terribly wrong when international diplomacy is conducted ‘on the run’ by a minister who had little understanding of Indonesia or the extent of the long term opportunities that would be lost as a consequence his impulsive decisions.

Meanwhile, Indonesia continues to remind Australia about what it did and to seek revenge for the shabby treatment from its neighbour; even if this means higher prices and shortages for its own people.

This is one trade outcome where everyone loses.