RPT-UPDATE 1-Indonesia opens door to unlimited live cattle imports, scraps quotas

Sun Jul 21, 2013 5:42pm EDT

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(Repeats report from late Friday; no change to text)

* Imports will still be monitored -trade minister

* Move will boost imports from suppliers such as Australia

* Indonesia to import 25,000 head of cattle within three months-Australia

By Yayat Supriatna

JAKARTA, July 19 (Reuters) - Indonesia will allow the unlimited importation of live cattle in an effort to curb domestic beef price rises, the country's trade minister said on Friday, abandoning an annual import quota system that has hit imports from suppliers such as Australia.

The move should boost the cattle and beef trade in Australia, the world's No.3 beef exporter.

Canberra halted live cattle exports in 2011 after the airing of footage showing harsh treatment of animals. The ban was lifted, but Jakarta then imposed restrictions on Australian beef and cattle imports in a bid to become self-sufficient.

The policies have hurt both sides with shortages and higher prices in Indonesia, while Australia's northern cattle industry has been in crisis, with weak meat prices and plunging land values further hampered by a drought last summer.

"I have signed the new ready-to-slaughter cattle regulation and we have allowed importers to import...with no limits, to stabilise beef prices," Indonesian Trade Minister Gita Wirjawan told reporters.

"They can import at any volume or number that the market needs," he added.

Earlier on Friday, Australia said that Indonesia was increasing live cattle imports from the country by 25,000 head of cattle over the next three months.

The Indonesian government would still the monitor timing and volume of cattle and beef imports, in order to ensure domestic beef prices are between 75,000-76,000 rupiah ($7.46-$7.55) per kg, Wirjawan added. That would be down around a fifth from the current national average price of 93,000 rupiah per kg.

Indonesia has been struggling to meet various 2014 self-sufficiency targets for food staples and has already said its soybean and white sugar goals would not be met.

In a bid to promote its domestic beef market, Indonesia slashed its import quota for live cattle by more than a third in 2012 and by another 30 percent for 2013. The beef import quota was cut by nearly two-thirds in 2012 and by 6 percent for 2013.

Total beef import quotas for 2013 were set 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.

Indonesia has faced resistance from consumers over the policy, however, after shortages drove up beef prices in Java and were tied to a political scandal.

Earlier this year, a panel of government advisers urged for the scrapping of food import quotas in Indonesia because they encourage bribes and price spikes.

In order to protect the domestic livestock industry, Wirjawan said that beef and cattle would only be imported if local prices spike by more than 15 percent.

To meet the spike in demand for beef during Muslim holy month of Ramadan and bring prices down to below 80,000 rupiah ($7.95) per kg, only an initial 25,000 head of cattle needed to be imported, said Joni Liano, executive director of the Indonesian Feedlot Association.

In late May, Indonesia relaxed restrictions on some imports to contain domestic beef prices and prevent shortages during Ramadan, when demand increases.

($1 = 10060.0000 Indonesian rupiah) (Additional reporting by James Grubel in Canberra; Writing by Michael Taylor; Editing by Ed Davies)

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