Beef Processors Say Import Cuts Could Shut Them Down

Some Indonesian meat processing companies will be forced to close shop if beef supplies do not improve within the next two weeks, industry officials said.

“Half of our members have submitted notice to the association that they will stop production if there is no more imported beef,” Haniwar Syarih, executive director of the National Meat Processors’ Association (Nampa), told media

Nampa’s membership includes 24 medium- to large-sized meat processing companies in Indonesia that employ around 8,000 workers.

The meat-processing industry has faced difficulties since the Ministry of Agriculture cut import quotas as part of its effort to reach beef self-sufficiency by 2014, with a goal of reducing imported beef to 10.4 percent of total consumption.

Beef import quotas were reduced to 50,000 tons this year, a sharp decrease from 120,000 tons in 2010.

Haniwar said Nampa’s members require an average of 18,000 tons of meat per year. With shipments slowing and some being stopped, production becomes more reliant on each company’s beef reserves. Based on his calculations, the stocks will run out within two weeks.

Nampa chairman Donatus Hartono said prices for beef had increased about 40 percent since the end of last year, from about Rp 27,000 to Rp 30,000 ($3.10 to $3.50) per kilogram to around Rp 45,000 per kilogram now.

Haniwar said the combined sales of Nampa members were about Rp 3 trillion a year. Soaring beef prices could leave companies facing hundreds of millions of rupiah in losses, he said.

Thomas Sembiring, executive director of the Indonesian Meat Importers’ Association (Aspidi), said about half of beef shipments go to processing companies.

Donatus blamed a lack of planning and communication by the government about the self-sufficiency program, saying the quota cut only created turmoil in the market because it was implemented without first securing the domestic beef supply.