Just when the Northern Cattle Industry thought that we may
have turned the corner, along comes a scandal which threatens the recovery of
the industry. The scandal this time is
in the form of espionage where Australia is accused of intercepting the mobile phones
of senior officials in the Indonesian Government.
What has all that got to do with cattle producers in the
north of Western Australia? Very little
is the answer, but it still seems the northern cattle industry could be the
collateral damage if the relationship between Australia and Indonesia continues
to sour and retaliation takes the form of lower beef and cattle imports.
The cattle industry in the north of Australia continues to
rely heavily on live exports and will continue to do so for the foreseeable
future. There is a processing facility
under construction in the Kimberley region of Western Australia. Initially at least this facility will source
cattle that are not suitable for the live export trade.
The live export trade plays to the relative strengths of
both Australia and Indonesia. In the
north of Australia, we have the comparative advantage of in breeding
cattle. With access to a variety of
by-products, Indonesia has advantages in feeding cattle. Low labour costs in Indonesia means that they
can process cattle very cheaply compared to Australia.
The contrast with breakdowns in diplomatic relations with
other countries could not be more stark.
The spat with China over comments made by the Foreign Minister does not
result in any threats of trade retaliation.
While the Australian cattle industry should continue efforts to diversify markets, the Indonesia will remain very important for the foreseeable future.
