Live cattle, boxed beef and wheat imports
from Australia are detrimental to Indonesian interests in ensuring greater food
security and establishing high-value strategic partnerships in Asia.
Indonesia must phase out its dependence on Australia in favor of alternative trading partners — such as India or Russia — that can offer a more secure and reliable food supply, provide greater strategic benefits and confide in complementary goals with Indonesian aspirations as a rising power.
Achieving food security through trade is a more promising strategy than food self-sufficiency. Throughout history, well-strategized, purposeful and selective trading has transformed quiet fishing villages into bustling commercial centers and global hubs of maritime power.
Nations that trade from “hand-to-mouth”, however, suffer an opposite fate. China traded its way into British opium addiction, Indonesia sold itself into a Dutch spice monopoly and the Middle East traded away its oil for perpetual Western wars.
Despite hiccups, Jakarta’s current policy on beef self-sufficiency remains feasible due to its limited scope and should not be equated with full-spectrum food self-sufficiency. Australian critics, however, are also correct in pointing out that beef self-sufficiency is an extremely challenging venture that cannot be achieved overnight and, in the short run, might undermine food security in terms of beef availability and affordability.
In recent years, Indonesian public sentiment, policy-making circles and political elites have grown increasingly supportive of protectionist measures. Although I strongly object to blank-check protectionism, the trade in live cattle, boxed beef and wheat with Australia is an excellent example of unthinking hand-to-mouth trading.
First, dependence on Australian live cattle, boxed beef and wheat imports greatly undermines Indonesia’s food security. Bilateral trade in this area rests on a fragile foundation. Indonesia continues to find itself held hostage to Canberra’s quasi-tribal domestic politics.
Indonesia is often treated merely as a rhetorical device whose interests and insecurities deserve neither consideration nor consultation.
Jakarta’s growing reluctance to steadily continue, let alone expand, its trade with Canberra is the result of numerous precedents of perceived Australian unfairness toward Indonesia.
In 2011, Australia unilaterally imposed a live cattle export ban ahead of Ramadhan against the country that previously bought 45 percent of its live cattle exports.
In 2013, Canberra was revealed to have given illegally obtained information to the US to use against Indonesia in a trade dispute concerning shrimps and clove cigarettes.
Australia’s plain packaging policy was seen as yet another technical trade barrier aimed at tobacco products, a labor-intensive industry that contributes US$670 million to Indonesia’s annual exports.
In 2015, Australia’s abuse of “boycott” rhetoric, the canceling of trade delegations, the recalling of its ambassador and halting of ministerial-level contact further damaged confidence within Indonesian business circles and importers, fostering perceptions that economic and trade relations between Indonesia and Australia were as shaky as its politics.
Australian wheat comes with a note of caution. Until 2005, Australia abused the UN Oil-for-Food program and bribed its way into controlling 90 percent of Iraq’s wheat market, resulting in the UN Volker Inquiry and Australia’s Cole Inquiry. Securing Australia’s wheat trade became an important agenda in the lead-up to the 2003 invasion of Iraq, in which Canberra repeatedly sought assurance from Washington that its near monopoly would be left unharmed in return for Australian support of the war.
Furthermore, common assumptions that trading more with Australia lessens the possibility of intervention and armed conflict are as misleading as they are historically incorrect.
Redirecting the bulk of live cattle, boxed beef and wheat trade away from Australia will diversify
Indonesia’s food sources and improve overall food security by anticipating potential droughts, crop and live cattle diseases, non-tariff barrier as well as future political fallouts with Australia.
Indonesia should prioritize high-value partnerships in Asia that could offer additional strategic benefits over of low-value unsustainable trade relations with Australia.
Australia’s relative decline and Indonesia’s sustained rise means that, over time, both will grow further apart in terms of their regional weight and global outlook. The two countries will inevitably develop divergent — and perhaps irreconcilable — interests.
The opportunity costs of trading with Australia will soon outweigh any future strategic benefits.
Insisting on unsustainable trade with Australia represents false intuition, an uninformed knee-jerk reflex to perpetuate the familiar, something that is unabashedly promoted by those who have a direct interest in Australian transactions and handouts.
Those who have an intimate interest in the Australian relationship masquerade under the pretense that their narrow interests represent and constitute the interests of the greater Indonesian public.
Redirecting our beef demands to neighboring India, in contrast, would increase Indonesia’s exposure to the Indian Ocean, further familiarizing Jakarta with the neighboring Asian giant that will continue to grow in economic power and geopolitical importance.
Over time, this will help foster a common interest in securing bilateral trade routes in addition to responding to the similar perceived threat of Chinese expansionism that might impact regional stability.
Similarly, importing wheat from faraway Russia offers considerable strategic spillover and is not as counter-intuitive as it might seem.
Having to freight our wheat from the Black Sea will force Indonesia to bargain for better deals, continuously renegotiate our terms of trade, incentivize a more cost-efficient commercial fleet, find suitable exports to fill returning cargos at a profit and, eventually, deploy the necessary naval assets needed to jointly protect our bilateral trade from disruptions at sea.
As the second largest arms exporter worldwide, relations with Russia could grow immensely in strategic value, especially once Indonesia achieves its Minimum Essential Forces in 2024.
Strategic spillovers, however, do not happen automatically. Indonesia must strive to ensure that our trade today is aimed at winning future strategic benefits and not merely designed to sustain a coolie’s hand-to-mouth existence.
Indonesia faces the dilemma of dependence mixed in with disrespect when dealing with Australia. Indonesia must now secure a “food bowl” for its citizens because a “begging bowl” made in Australia will not suffice.
The writer Pierre Marthinus, is executive director for the Marthinus Academy in Jakarta.
Indonesia must phase out its dependence on Australia in favor of alternative trading partners — such as India or Russia — that can offer a more secure and reliable food supply, provide greater strategic benefits and confide in complementary goals with Indonesian aspirations as a rising power.
Achieving food security through trade is a more promising strategy than food self-sufficiency. Throughout history, well-strategized, purposeful and selective trading has transformed quiet fishing villages into bustling commercial centers and global hubs of maritime power.
Nations that trade from “hand-to-mouth”, however, suffer an opposite fate. China traded its way into British opium addiction, Indonesia sold itself into a Dutch spice monopoly and the Middle East traded away its oil for perpetual Western wars.
Despite hiccups, Jakarta’s current policy on beef self-sufficiency remains feasible due to its limited scope and should not be equated with full-spectrum food self-sufficiency. Australian critics, however, are also correct in pointing out that beef self-sufficiency is an extremely challenging venture that cannot be achieved overnight and, in the short run, might undermine food security in terms of beef availability and affordability.
In recent years, Indonesian public sentiment, policy-making circles and political elites have grown increasingly supportive of protectionist measures. Although I strongly object to blank-check protectionism, the trade in live cattle, boxed beef and wheat with Australia is an excellent example of unthinking hand-to-mouth trading.
First, dependence on Australian live cattle, boxed beef and wheat imports greatly undermines Indonesia’s food security. Bilateral trade in this area rests on a fragile foundation. Indonesia continues to find itself held hostage to Canberra’s quasi-tribal domestic politics.
Indonesia is often treated merely as a rhetorical device whose interests and insecurities deserve neither consideration nor consultation.
Jakarta’s growing reluctance to steadily continue, let alone expand, its trade with Canberra is the result of numerous precedents of perceived Australian unfairness toward Indonesia.
In 2011, Australia unilaterally imposed a live cattle export ban ahead of Ramadhan against the country that previously bought 45 percent of its live cattle exports.
In 2013, Canberra was revealed to have given illegally obtained information to the US to use against Indonesia in a trade dispute concerning shrimps and clove cigarettes.
Australia’s plain packaging policy was seen as yet another technical trade barrier aimed at tobacco products, a labor-intensive industry that contributes US$670 million to Indonesia’s annual exports.
In 2015, Australia’s abuse of “boycott” rhetoric, the canceling of trade delegations, the recalling of its ambassador and halting of ministerial-level contact further damaged confidence within Indonesian business circles and importers, fostering perceptions that economic and trade relations between Indonesia and Australia were as shaky as its politics.
Australian wheat comes with a note of caution. Until 2005, Australia abused the UN Oil-for-Food program and bribed its way into controlling 90 percent of Iraq’s wheat market, resulting in the UN Volker Inquiry and Australia’s Cole Inquiry. Securing Australia’s wheat trade became an important agenda in the lead-up to the 2003 invasion of Iraq, in which Canberra repeatedly sought assurance from Washington that its near monopoly would be left unharmed in return for Australian support of the war.
Furthermore, common assumptions that trading more with Australia lessens the possibility of intervention and armed conflict are as misleading as they are historically incorrect.
Redirecting the bulk of live cattle, boxed beef and wheat trade away from Australia will diversify
Indonesia’s food sources and improve overall food security by anticipating potential droughts, crop and live cattle diseases, non-tariff barrier as well as future political fallouts with Australia.
Indonesia should prioritize high-value partnerships in Asia that could offer additional strategic benefits over of low-value unsustainable trade relations with Australia.
Australia’s relative decline and Indonesia’s sustained rise means that, over time, both will grow further apart in terms of their regional weight and global outlook. The two countries will inevitably develop divergent — and perhaps irreconcilable — interests.
The opportunity costs of trading with Australia will soon outweigh any future strategic benefits.
Insisting on unsustainable trade with Australia represents false intuition, an uninformed knee-jerk reflex to perpetuate the familiar, something that is unabashedly promoted by those who have a direct interest in Australian transactions and handouts.
Those who have an intimate interest in the Australian relationship masquerade under the pretense that their narrow interests represent and constitute the interests of the greater Indonesian public.
Redirecting our beef demands to neighboring India, in contrast, would increase Indonesia’s exposure to the Indian Ocean, further familiarizing Jakarta with the neighboring Asian giant that will continue to grow in economic power and geopolitical importance.
Over time, this will help foster a common interest in securing bilateral trade routes in addition to responding to the similar perceived threat of Chinese expansionism that might impact regional stability.
Similarly, importing wheat from faraway Russia offers considerable strategic spillover and is not as counter-intuitive as it might seem.
Having to freight our wheat from the Black Sea will force Indonesia to bargain for better deals, continuously renegotiate our terms of trade, incentivize a more cost-efficient commercial fleet, find suitable exports to fill returning cargos at a profit and, eventually, deploy the necessary naval assets needed to jointly protect our bilateral trade from disruptions at sea.
As the second largest arms exporter worldwide, relations with Russia could grow immensely in strategic value, especially once Indonesia achieves its Minimum Essential Forces in 2024.
Strategic spillovers, however, do not happen automatically. Indonesia must strive to ensure that our trade today is aimed at winning future strategic benefits and not merely designed to sustain a coolie’s hand-to-mouth existence.
Indonesia faces the dilemma of dependence mixed in with disrespect when dealing with Australia. Indonesia must now secure a “food bowl” for its citizens because a “begging bowl” made in Australia will not suffice.
The writer Pierre Marthinus, is executive director for the Marthinus Academy in Jakarta.
New Trade Minister Reverses Cattle Import Restriction, Orders 300,000 More Head
ReplyDelete“The agriculture minister and I talked and we are ready to flood the market [with imported cattle],” Trade Minister Thomas Lembong told reporters in Jakarta on Tuesday.
Thomas was appointed trade minister last week, replacing the much-criticized Rachmat Gobel, who ordered the earlier slash in quarterly cattle imports from close to 300,000 to just 50,000.
“We might import 200,000 to 300,000 head of cattle for the rest of this year,” Thomas said.
An investment banker and private equity manager until last week, Thomas has argued against protectionist trade policies, including those adopted by his predecessor, saying they would only hurt the economy.
“The government is really unhappy with the high beef prices. I’ve talked with the agriculture minister and I believe he has a sound strategy to develop this industry in the long run,” he said.
Beef currently sells for around Rp 109,000 ($7.90) per kilogram, 11 percent higher than a year ago, according to the Trade Ministry.
Thomas did not say where Indonesia planned to import the additional cattle from or when they would arrive.
The government earlier this month ordered state procurement agency Bulog to import an additional 50,000 head of cattle in the third quarter – on top of the 50,000 that Rachmat had approved – following a public outcry over rising beef prices.
The Trade Ministry approved imports of 75,000 head of cattle in the first quarter of the year and 279,000 in the second quarter.
Investor Daily