The government should place the issue of beef on its top list of priorities that must be immediately solved. The price of beef has been way above the regular price for months now. Some estimate the high price of beef will continue until after Eid al-Adha, which is in the middle of October. They also believe the price of top quality beef still exceeds the government’s set price at Rp80,000 per kilogram.
The main issue behind the expensive cost of beef is a consumption rate that exceeds the local supply of beef. The government has actually taken a shortcut by importing beef from Australia, a move it has never taken before. So far, the government has imported beef cuts or feeder cattle. Unfortunately, consumers did not respond well to the policy implemented by the State Logistics Agency (Bulog). They refused to purchase imported beef.
The current situation portrays how the government is unable to respond to the changing conditions of domestic cattle trade. In the Agriculture Ministry’s blueprint, Indonesia should reach cattle self-sufficiency by next year. The amount of local cattle must increase in order to lower the gap between supply and demand, which will lower the need to import. In 2010, the gap was still 30 percent and last year, it dropped to 17 to 20 percent.
On paper, the government’s seems like it will be able to achieve its target. However, in reality, the opposite has taken effect. The number of cattle did increase, but the composition is far from ideal. A majority, or 96 percent, of cattle are owned by farmers. Only four percent, or around 600,000 cattle are in large farms, which are actually the only cattle the government can use for market operations with the nation experiences a shortage of beef.
This non-ideal composition is the cause of the short supply of beef that cannot be immediately overcome. The slow pace of regular import, caused by the delayed permit from the government, has caused prices to soar. The government cannot immediately implement market operations because the stock of cattle is in the hands of farmers. The government then attempted to speed up the delayed market operation by directly importing beef cuts, yet it was too late. The situation was already too bad.
In a situation like this, the government needs to immediately issue policies in order to resolve this beef problem, one of which can include a policy for large-scale cattle farms. Malaysia successfully used palm oil plantations to create large-scale cattle farms in order to meet the demands for beef. Indonesia can use this as an example because we also have many palm oil plantations.
The policy must be designed by involving several parties: government and private plantations for the location of the farms, the Agriculture Ministry to resolve the issue of cattle breeding or feeder cattle, the Finance Ministry to provide incentive for those who are willing to implement this policy, and the Trade Ministry to overcome the short-term problem of shortage. Aside from that, the government needs to create affordable docks and transport. This policy will surely be costly. However, without a breakthrough, it will be difficult for Indonesia to break free of this beef shortage problem. (*)