Indonesian impound of beef poses human rights issues

Nov 2, 2012

For three months now, Indonesian customs officials have impounded an estimated 2,500 tons of frozen beef at the Jakarta port on the northwestern tip of the country. The beef originated from the U.S., Australia and New Zealand. The move came on the grounds of exceeded import quotas. Yet at the same time, Indonesians are desperate for beef.

An Australian export organization last week urged the Australian government to intervene in the situation languishing in the Jakarta port of Indonesia where at least $8.3 million worth of beef is being held hostage and at risk of spoiling. The Indonesian government said the beef has been halted at the port because it exceeds allotted quotas and was not accompanied by a required approval letter from the Indonesian Ministry of Trade. Officials reportedly are also looking into whether the import permits were forged.

Despite reports of the questioned permits bearing the signature and seal of the Director General of Trade in Indonesia, relevant Indonesian officials haven’t been reachable during the issue and those who are involved seem slow to act. Exporters impacted by the impound claim Indonesia is dishonoring its own permits and call for direct intervention at the ministry level.

“Our embassy only has access to heads of departments such as customs, trade, etc., and the officials there move at their own pace and insist on every piece of paper being provided,” Geoff Bull from Allegro Exports—one of the affected exporters—told the Australian Beef Central.

“We need our minister to urgently contact the Indonesian minister of trade and request his urgent attention to end the problem.”

Bull and others have pointed out that the extended time the product is held in the port, with the ship incurring port charges, is seriously causing them to consider abandoning the containers rather than try to re-export the product elsewhere.

The situation is particularly frustrating to both sides with the Indonesian government seeming to dawdle as the bureaucratic middleman. Exporters can’t get their product to the importers despite apparently sound permits because of claimed quota issues. In the meantime, Indonesian importers and consumers desperately want to get the product.

Recent official cuts to Indonesia’s beef import quotas on self-sufficiency interests have created a desperate market for beef and other food products. Prices for beef and other meats in Jakarta are reportedly “through the roof” due to these trade situations.

Indonesia set its 2012 beef import quota at 85,000 tons of beef. The quota is broken down quarterly and between live cattle and frozen beef for processing. This amount was set based on government calculations of what the country would produce domestically and what its consumption needs would be.

By early summer, however, it became clear the quotas and domestic production would not sate domestic demands. The Indonesian Beef Committee called on the government to increase the import quota by 50,000 tons ahead of the beef- and meat-heavy Muslim holidays of Ramadan and Eid al-Fitr, important times for the country’s largely Muslim population. While the government did increase the quota, it was insufficient to meet demand and the price of beef was and continues to be exorbitantly high.

The Indonesian Agricultural Ministry estimated a kilogram of beef cost an average of 90,000 rupiahs (about $20.94 per pound) during this year’s Ramadan, which ran from mid-July to mid-August. This was over 60 percent higher than the price of beef the same time the year before.

The ministry also estimated the price of beef could go as high as 200,000 rupiahs per kilogram (about $46.45/pound) by the end of the year because of shortages incurred by low import quotas and overconfident expectations of domestic production. The average monthly income of workers in Jakarta is about 4,656,933 rupiahs (about $485). In the poorer rural areas, this number is vastly lower.

Indonesia has roughly 77 percent of the U.S. population—242.33 million in 2011 versus 311.59 million—yet has barely 20 percent the amount of land as the U.S. It has historically depended heavily on food imports to sustain itself. Despite this, it still ranks as the 10th most agriculturally productive country in the world and is an active exporter of many agricultural items such as many common baking spices, coconuts, fish and rice.

Recent moves away from Indonesian dependence on rice and greater diversification to more nutrient-rich crops and more valuable internationally-traded crops has begun reducing both the population in poverty and the undernourished population. Beef production, however, is difficult given the high demand and the unavailability of land on which to raise cattle.

Though it is unclear precisely how much of the impounded beef is American, trade data from the time sheds some light on the possibilities. The meat in question was originally impounded in the middle of July and it can take several weeks for exported beef to reach its destination. According to the U.S. Meat Export Federation, the U.S. exported 51 metric tons of beef and variety meats, valued at $93,000, to Indonesia in June. For July, the numbers were 394 metric tons valued at $1.05 million. This sizable increase from June to July was likely spurred on by the Indonesian government’s increase of the quota at the behest of the Indonesian Beef Committee.

For this year, U.S. beef and variety meat exports to Indonesia are down drastically in volume (down 74 percent as of August, the most recent data) and significantly in value (down 42 percent) compared to last year. This is largely the result of Indonesia’s reduced import quotas enacted in an effort to improve the country’s self-sufficiency, according to the Indonesian government.

Indonesia has had a troubled recent past in terms of trade relations and beef. Most recently, the Organisation for Economic Co-operation and Development (OECD) released a report in early October claiming Indonesia’s trade practices and attempts at food self-sufficiency amounted to protectionist trade behavior.

The Indonesian Agricultural Minister countered, attacking the report and accusing the organization of hypocrisy.

“They were not being objective. In developed nations, agricultural sector is subsidized and protected by the government.”

The minister specifically pointed out the U.S., which is also a member of OECD, and its millions of dollars in disaster relief for agriculture this year and last. He said agriculture subsidies shield U.S. farmers from price volatility and harm international farmers, as well as being tantamount to the protectionism of which his country was being accused.

The OECD report also claimed the self-sufficiency goal and resulting import quotas is also a human rights issue because of its effects on food prices and disastrous results for poor rural Indonesians.

“Import protection hinders the competitiveness of the agricultural sector, limiting agricultural productivity growth and increasing food costs for poor consumers, including the majority of farmers, who are net buyers of food staples.” — Kerry Halladay, WLJ Editor