UPDATE 2-Indonesia relaxes limits on Australian beef imports
* Indonesia to exempt premium beef from quotas -Aus govt
* Timing of live export quotas changed
* Move will ease pressure on Australia cattle farmers (Adds quotes, detail)
By Colin Packham and Yayat Supriatna
SYDNEY/JAKARTA, May 28 (Reuters) - Australia's beef industry will be able to lift sales to one of its biggest markets after Indonesia relaxed restrictions on some imports to contain local beef prices and prevent supply shortages under a policy aimed at increasing self sufficiency.
Indonesia has agreed to exempt "premium" Australian beef imports from quotas, Australian Trade Minister Craig Emerson said on Tuesday. It will also allow live cattle exporters to start filling quotas intended for the final six months of the year ahead of schedule.
Australia is the world's third-biggest beef exporter and has relied heavily on Indonesian demand, but the tightening of quotas by its largest live cattle market in 2012 and 2013 has hurt the industry.
Indonesia slashed its 2012 import quotas for live cattle by over a third and beef by nearly two-thirds, while 2013 quotas were cut by another 30 percent for cattle and 6 percent for beef, as Jakarta sought to promote its own domestic beef market.
Australian beef cattle prices have recovered slightly in the last week, with the Eastern Young Cattle Indicator, a benchmark, rising 2 cents on Monday to A$2.96/kg, although prices remain 20 percent lower from a year ago.
"Today's decision means that those farmers that have stock available, there is an opportunity to get them on the boat," said Alison Penfold, chief executive of Australia's Live Export Council.
Indonesia's quotas on beef imports are aimed at building up its own domestic beef industry, but the policy has created shortages and rising prices.
"These measures are taken to stabilize beef price in the domestic market so that people can afford beef for their daily meal," Indonesian Trade minister Gita Wirjawan said.
Indonesia set total beef import quotas for 2013 at 32,000 tonnes, of which approximately 20 percent consisted of prime cuts. The live cattle import quota was set at 267,000 head of cattle.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecast beef and veal exports to Indonesia in the 2012-13 season would be 26,000 tonnes, a fall of 32 percent from the previous year. Total Australian boxed beef exports were put at 2.19 million tonnes in 2012/13.
ABARES forecast live cattle exports at 450,000 head of cattle during the 2012/13 marketing year.
Despite softening their stance, the Indonesian government said it was committed to protecting domestic beef producers.
"There has to be protection to cattle farmers from excessive beef imports so that cattle prices at the farmer level can be kept at a beneficial level," said Indonesian Agriculture Minister Suswono.
As part of the protection Indonesia said prime slaughtered beef would be permitted to be unloaded at three main airports in Jakarta, Bali and Medan.
"Any increase in quotas is welcomed but it is incumbent on both governments to develop trading protocols that send correct signals to producers and customers," said David Farley, managing director of the Australian Agricultural Company, the country's largest beef producer.
AAC last week reported a first-quarter loss of A$46.5 million ($44.82 million), blaming it on the live cattle ban and dry conditions across much of the country's east coast.
The Australian government suspended live cattle exports to Indonesia in 2011 following the airing of footage showing harsh treatment of animals. The ban was lifted after a month, although the Australian cattle sector says the move damaged the trade.
($1 = 1.0375 Australian dollars) (Additional reporting by Yayat Supriatna; Editing by Joseph Radford and Ed Davies)
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