JAKARTA: News that Australian feeder cattle exports headed for Indonesia are to immediately incur an additional ten per cent tax has industry leaders frantically navigating foreign ministries today.
At a time of record prices, the removal by the Indonesian Government of the Value Added Tax exemption that has traditionally applied to feeder cattle, both imported and domestic, has come ‘out of the blue’, according to Northern Australian cattle industry leaders.
The Australian Livestock Exporters Council said the consequences of the announcement, which had only just filtered through to Australian operations, and the reasons behind it were still being investigated, with discussions underway today.
However, at this stage it was understood productive heifers from Australia would remain exempt, ALEC confirmed.
The extra tax will be a huge blow to importers and feedlotters given the price of Australian live cattle has close to doubled in just 12 months.
Live exports to Indonesia were making up to $3.50/kilogram at the end of last year, up from the $2 to $2.30 of 2014, and there was ‘no mechanism in the marketplace to suggest any change to that trend’, according to Northern Territory Live Exporters Association chief executive officer Stuart Kemp. He said there had been no indication the Indonesia tax move was coming.
“This is a domestic tax, not a tariff issue, so it has to be business as usual from the perspective of Australian exporters,” he said. As exporters negotiate contracts with their Indonesian business partners under the latest permits, it would remain to be seen the extent of pushback the additional tax created, he said.
The buoyant live trade game was creating a noticeable mood shift in the pastoral industry across the north of Australia, Mr Kemp said. Along with paying down debt, it was creating the opportunity for operations to re-invest in repairs and maintenance, further subdivisions and water and genetics improvements, he said.
