Australia’s largest cattle producer, Australian Agricultural Company Ltd (AACo), exported more live cattle during 2011 despite the Australian government’s temporary ban on live exports to Indonesia.
“Notwithstanding the disruptions caused by the live export suspension to Indonesia, trading numbers materially improved…,” AACo said on Tuesday.
The federal government suspended the live cattle exports to Indonesia in June 2011 after ABC TV screened footage of Australian cattle being mistreated in Indonesian abattoirs.
Live exports to Indonesia restarted in August 2011.
AACo said the number of live cattle exported to all of its markets – including Indonesia, Vietnam, the Philippines and Japan – rose to 80,085 in 2011 from 76,755 in 2010.
But it reduced its trading volumes of Indonesian feeder cattle due to the uncertainty created by the Australian government policy.
AACo managing director David Farley said the ban on live exports to Indonesia in mid-2011 had cost AACo at least $5 million to $8 million.
But since trade had resumed, the market value of cattle in the areas affected by the suspension had improved.
Mr Farley said Indonesia had held the ambition of growing its own beef and becoming less reliant upon the live cattle trade with Australia for some time.
“(But) I do think Australia will remain a strategic supplier to their food security programs,” he told reporters.
He said the size of Indonesia’s population and the growing demand for meat as Indonesians became wealthier would underpin demand for Australian cattle.
Indonesians also liked to eat disease-free meat that was killed on the day it would be consumed and Australia could meet those supply requirements.
Mr Farley said the fact that Indonesia was an archipelago also made it difficult for Indonesia to move Indonesian-bred cattle into the more heavily-populated markets.
Asked if he expected trade with Indonesia to increase, Mr Farley said trade would likely comprise variable volumes of live cattle and boxed meat.
But Indonesian consumers were not taking up refrigerated products as fast as western consumers.
“I can see comfortably, when you look out to a decade ahead, that they (Indonesia) will still be a significant trading partner of live cattle for Australia,” Mr Farley said.
Mr Farley said AACo was developing other markets such as Vietnam and the Philippines, and parts of Europe were also demanding more beef.
AACo on Tuesday booked a net profit after tax of $10.5 million for the 2011 calendar year, up from $904,000 in 2010, as a three-year turnaround strategy that started in 2010 gained momentum.
Excellent seasonal conditions had increased pasture levels, resulting in greater cattle numbers and weight, and the company’s live export sales increased.
AACo’s number of cattle increased 15 per cent to 665,591.
“AACo believes it will be well positioned to take advantage of the tightness of global beef supply and the extremely positive pricing environment to increase profitability…,” AACo said.
AACo plans to establish a meat-processing plant near Darwin in the Northern Territory in 2012, at a cost of $80 million to $85 million.
Mr Farley said the “carbon-efficient” plant would be able to supply large European supermarkets, with (carbon) offset credits or premiums attached to the meat.
Shares in AACo were 0.5 cents higher at $1.39 on Tuesday.
