After a meeting with Indonesian President Joko Widido Key said he was hopeful the trade could start to get back to normal before the World Trade Organisation ruled on the dispute later this year.
“I feel exceedingly confident that we are going to get there," Key said after meeting Widido.
Controls on beef imports were estimated to have cost exporters here a billion dollars in lost sales since 2010 and prompted the Government to take a case challenging them at the WTO in conjunction with the United States earlier this year.
Meat Industry Association chief executive Tim Ritchie, who was in Jakarta with Key, said he welcomed signs of progress in overcoming the dispute in what had been in the past a very lucrative market for NZ exporters.
But perhaps mindful of similar political signals in the past Ritchie was wary of predicting an imminent breakthrough.
During Key’s last trip to the Indonesian capital in 2012 the beef dispute was raised with Widido’s predecessor Susilo Bambang Yudhoyono who said he would instruct his trade officials to resolve it.
“Until one sees the finer detail … one needs to be a little bit cautious.”
Before the clampdown on imports began to bite in 2010 Indonesia was the second biggest buyer of NZ beef after the United States but now ranked only ninth largest by volume and did not make the top 10 by value.
Coming to power in 2014 Widido was quick to back his predecessor’s drive for self-sufficiency in beef production.
But by restricting imports Indonesia had succeeded only in pushing domestic prices well out of the reach of ordinary Indonesians as local farmers were unable to keep pace with local demand for beef.
High prices further incentivised local farmers to slaughter breeding stock in a downward spiral that saw cattle numbers sink from 14.8m in 2011 to 12.3m by 2013.
There have been recent signals of some loosening of import controls.
“They might be getting to the point where they say this does not make much sense and maybe we should look to NZ to try and satisfy the demand in the market.”
Mike Petersen
Trade envoy
Just last month Indonesian government officials followed up Widido’s call for beef prices to fall ahead of the Islamic festival of Ramadan by issuing a fresh allocation of 10,000 tonnes of import quota.
Although exporters were dubious about the relaxation coming as it did during the seasonal lull in NZ production Ritchie said more encouraging was an extension of quota allocation periods also approved.
Extending the period quota was valid for from three to four months gave exporters valuable extra time to apply for quota, get product shipped and leave a reasonable amount of time to sell it in the market.
“There is no way we can produce and ship in that short a period … so one of the things that we have been trying to impress on parties in Indonesia is that the meat companies back in NZ need to plan production and that longer period is one way which would ensure that we can meet their needs.
“The product is not sitting in store waiting for a container – it has actually got to be produced as part of a plan.”
Speaking ahead of Key’s visit the Government’s agricultural trade envoy Mike Petersen said pressure was rising on Indonesia to revisit its protectionist beef policy.
“They want to be self-sufficient in beef and of course they have been successful because it is so expensive now that no one is eating it.
“They might be getting to the point where they say this does not make much sense and maybe we should look to NZ to try and satisfy the demand in the market.”
Australia and NZ have historically accounted for 85% of Indonesia’s beef imports.
