T

he government is encouraging local and foreign investors to invest in Indonesia'€™s cattle industry not only in livestock breeding but also in storage and transportation facilities to help cater to the growing demand for meat, a senior official has said.

In addition to breeding technology, Indonesia still needs more investment to provide modern meat storage and transportation facilities in order to cope with distribution bottlenecks in the vast archipelago, Deputy Trade Minister Bayu Krisnamurthi said in Jakarta on Thursday

Breeding cattle and providing meat as well as livestock transportation facilities offer promising business opportunities, because the demand for meat in Indonesia is growing rapidly, he said, adding that although the per capita consumption is still relatively low, it is increasing sharply due to the growing middle-class bracket, he said.

'€œConsidering all the facts, I expect domestic beef consumption to grow by double digits in the next 10 to 20 years,'€ he said. At present, the per capita meat consumption growth is 4.2 percent.

Bayu said that the lack of proper transportation facilities have seriously hampered the distribution of meat and live cattle, causing massive price gaps from one area to another.

'€œWe haven'€™t had proper infrastructure to support meat and live cattle transportation in our vast territory. We also need to reduce the amount of time needed to transport products from one place to another for the sake of efficiency,'€ he said.

He said the government was currently engaging in discussions with investors to see what it could
offer them.

'€œI hope that agribusiness research firms will disseminate their knowledge about the cattle industry to provide guidance to investors about how to boost beef supply,'€ he told reporters after the seminar.

Currently, Indonesia is still unable to fulfill domestic beef demand and relying on imports to cater to local consumption. In order to protect local farmers, the Indonesian government imposes a strict import quota system in dealing with domestic meat shortage. But, the import quota system is hurting importers because the quota set by the government is only based on short-term needs.

According to the data from ANZ Agribusiness Research, Indonesia'€™s domestic beef production in 2012 fulfilled only 66 percent of the country'€™s 490,000 tons of consumption. Indonesia catered to the remaining 34 percent by importing packaged beef and live cattle.

The Indonesian representative of food consulting firm Meat and Livestock Australia, John Ackerman said that the quota system caused confusion among foreign investors as the government often changed it on a three-month basis.

'€œIt'€™s very difficult to formulate a long-term strategy when you don'€™t know what to do in the next three months,'€ he said.

Separately, New Zealand Ambassador to Indonesia David Taylor said trade constraints that resulted from the import quota imposed by the Indonesian government caused his country to suffer US$175 million in losses in annual trade during the last two and a half years. '€œWe need to get the trade going again to encourage people to invest, partner and do things in Indonesia. We are talking to some Indonesians who are keen to work with us, but nothing has reached the point of contracts just yet,'€ he said.(ogi/mtq)