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Abbott open to Indonesia buying Aussie land for cattle
Publication Date : 02-10-2013
Visiting Australian Prime Minister Tony Abbott said he welcomed the idea of Indonesia buying land in Australia to breed cattle in a move aimed at building trust after a short-lived ban on cattle exports by the previous government drove up prices and strained ties.
Addressing a business forum on the second day of his maiden visit to Indonesia as prime minister, he said both countries should play to their strengths - Australia is efficient at breeding cows, while Indonesia is better at fattening them.
His comments on Tuesday continued his conciliatory tone from Monday, when he reassured Indonesia of Australia's respect for its sovereignty after his tough stance on turning back boats carrying asylum seekers sparked outrage among Indonesians.
Clearly, the Australian leader was keen to repair trade ties with Indonesia, which he sees as a key trading partner. Indonesians, meanwhile, see Australia's vast farmlands as one option to guarantee a stable supply of cattle as an expanding middle class among their 250-million population consumes more beef.
Abbott's comments pave the way for Indonesia's state-owned agri-business company, PT Rajawali Nusantara, to buy land through a joint venture with an Australian company in a deal that could result in a new supply of live cattle from next January.
Prices of beef have remained high, at around 90,000 rupiah (US$7.80) a kg, in urban areas like Jakarta and have forced the government to relook import quotas.
Yesterday, Finance Minister Chatib Basri told reporters Indonesian firms have been looking at investing in land in Australia to ensure adequate supply.
Outlining the economic rationale for such a move, Vice-Trade Minister Bayu Krisnamurthi said that the cost of breeding cattle in Australia is one-third of that in Indonesia, while the cost of fattening them in Indonesia is one-fourth what it costs in Australia.
Cattle bred in Australia are of higher quality due to better land conditions, but animal feed in Indonesia is much cheaper.
But he noted that the planned investment was also prompted by the disruption to Indonesia's supply in 2011, when Australia slapped a ban on live cattle exports to Indonesia after TV reports showed footage of animal abuse in Indonesian abattoirs.
The ban was lifted with strict conditions after reports emerged that the workers had allegedly been paid to torture the animals to make for more dramatic video.
"Nothing like this can ever be allowed to happen again," Abbott said Tuesday.
"Last year, I visited abattoirs in Indonesia which were quite comparable to those in Australia and reject any notion that Indonesian standards are lower than Australia's."
The Australian leader brought a 20-member delegation comprising senior trade leaders and businessmen to signal his seriousness about improving trade.
Australia will also build on the joint Red Meat and Cattle Forum, established in July to foster links between the meat industries in both countries.
The Australian Livestock Exporters Council welcomed Abbott's comments, with its chief executive, Alison Penfold, quoted telling ABC: "I certainly don't see it in any way as sweeping under the carpet those animal welfare improvements that industry needs to make."
She added: "(But) it signals a return to policy settings that provide certainty and stability for producers and exporters."