FMD and Beef Market
The demand for beef has grown by around 6.4 percent per year, much higher than the annual growth in production capacity at only 1.3 percent. T
While the consumption of beef is projected to amount to around 706,388 tons in 2022, Indonesia is predicted to be able to produce only around 436,704 tons.
The demand for beef has grown by around 6.4 percent per year, much higher than the annual growth in production capacity at only 1.3 percent. The shortage has so far been recouped through imports, making Indonesia a lucrative meat market for the world's beef producing countries.
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India, as one of the world’s largest beef and buffalo exporters, has long had big interests in the size of the Indonesian meat market. Unfortunately, India has not been free from foot and mouth disease (FMD). The country’s exporters began their ventures into the Indonesia market only when the latter was declared free of the FMD without vaccination by the World Animal Health Organization (OIE) in 1990.
Risky maneuvers
Smuggled meat then started to arrive from India through entry points in neighboring countries such as Malaysia, Brunei Darussalam and Singapore. India, where most of the people do not eat beef, has a comparative advantage with the price of meat relatively much cheaper than other countries.
The significant price margin attracted Indonesian traders to dominate the meat market share in the country. They made maneuvers to import meat from India through various methods, from price margins, a monopoly, high meat prices to a concept of buy-back bartering.
The maneuvers began to yield results by a leeway of monopoly issues on beef imports in Indonesia around the early 2000s.
The following maneuver was done with the intention of opening maximum security protection from FMD, which led to the amendment of the law on livestock and animal health, from Law No. 6/1967 to Law No. 18/2009. Through the amendment, the government and the House of Representatives sought to enhance the protection of livestock against diseases in Indonesia. They instructed no longer country, but zone-based protection, on the grounds that Indonesia was an
country.
There emerged accusations of the country dominating the meat market (monopoly), which was blamed for the hiking prices of meat. It was played down by the farming community and senior veterinarians. While also denouncing the accusation, the then-director general of husbandry and animal health (PKH) acknowledged that Indonesia had not built adequate strategic facilities to protect against possible attacks of infectious animal diseases, such as the FMD.
The polemics ended at the Constitutional Court with the decree No. 137/PUU-VII/2009 stipulating that the import of livestock and livestock products continued to adhere to a country, not zone, basis.
The polemics were raised during a public hearing in the House. However, it appeared the provisional phrase containing the issues was retained in the newly amended Law No. 18/2009. The polemics ended at the Constitutional Court with the decree No. 137/PUU-VII/2009 stipulating that the import of livestock and livestock products continued to adhere to a country, not zone, basis.
However, another amendment was imposed on Law No. 18/2009 in 2014, which re-included the provisional phrase of the zone basis for livestock and livestock products imports. In the second case, a lawsuit was filed back to the court by farming community members. Through the decree No. 129/PUU/XIII/2015, the Constitutional Court stated that imports of livestock and livestock products were allowed from zone-based countries.
This legal product gave way to a derivative on operational policies in the form of Government Regulation (PP) No. 4/2016, Ministerial Regulation No. 17/Permentan/PK.450/5/2016 and the Agriculture Minister’s decree No. 2556/2016, which allowed the entry of Indian meat.
The farming community did not appear to be satisfied with the decision, which led them to file a judicial review to the Supreme Court over the issuance of Government Regulation No. 4/2016.
They argued that while not free from FMD, India applied zonal designation. The Supreme Court's decision, No. 27/P/HUM/2018 ruled to stick to Government Regulation No. 4/2014. Beef imports from India have been legal since June 2016.
Import moratorium
All of these phenomena marked Jokowi's efforts to lower beef prices. However, the targeted Rp 80,000 (US$5.45) per kilogram never materialized. In fact, in the consumer market, the price of Indian meat increased, equivalent to local meat.
A worrying issue is the ongoing outbreak of the FMD in East Java. What I feared the most, that the government’s policies over imports from countries not yet free of FMD would receive resistance, came true.
This FMD outbreak has caused enormous national losses, no less than Rp 15.5 trillion (Sudardjat, 2015), not including the impact of losses in other economic sectors, such as tourism, exports of agricultural commodities, declining livestock populations and beef-based food packaging.
This incident should prompt the Indonesian Ombudsman to evaluate the government’s policies, which have turned out to be flawed. On the other hand, the government should conduct a moratorium on the policy of importing meat from countries that are not yet free of FMD, as well as reconstructing livestock development and veterinary health. Hopefully.
Rochadi Tawaf
Rochadi Tawaf, Expert council member of the Indonesian Association of Animal Husbandry Engineers and Scholars (ISPI); advisor to the Indonesian Association of Husbandry Socio-Economic Scientists
(This article was translates by Musthofid)
