JAKARTA: Plans by Indonesia's new president to make the nation self-sufficient in foods such as beef are showing signs of backfiring, with a major industry group warning prices for the meat could soar 50 percent in the next few months.
Climbing meat prices as the government clamps down on imports could exacerbate a rise in inflation that would likely come if oil prices make a strong recovery from their recent lows, hitting efforts to boost Southeast Asia's largest economy.
Reduced imports would also hurt shipments from world No.3 beef exporter Australia, whose farmers last year supplied around 40 percent of the beef consumed in Indonesia.
"The government is too obsessed about self-sufficiency," Thomas Sembiring, executive director at the Indonesian Meat Importers Association (ASPIDI) told Reuters.
Indonesia's agriculture ministry said it was unable to make immediate comment on the self-sufficiency drive.
Domestic beef prices have already risen to 105,000 rupiah ($8) per kg from around 80,000 rupiah a year ago, according to ASPIDI.
Sembiring estimates they will climb above 150,000 rupiah ahead of the Islamic holy month of Ramadan in June when demand usually spikes in the country of more than 240 million.
President Joko Widodo, who took office in October, has set numerous food self-sustainability targets, including beef within one year. The government in January introduced a law banning imports of offal and secondary beef cuts.
Beef imports stand at around 12,000 tonnes so far in the first quarter, versus 170,000 tonnes for the whole of 2014.
The live cattle quota for the same period is just 100,000 head compared with a total 720,000 last year. Taking into account market conditions, Indonesia's government sets live cattle import quotas every quarter.
"The live trade is not a switch on or off industry," said Alison Penfold, chief executive at the Australian Livestock Exporters Council.
"The uncertainty coupled with an increasing shortfall in cattle in Indonesia to meet domestic demand will no doubt impact consumers, particularly during Ramadan."
Analysts say President Joko Widodo's push to produce more food at home risks repeating mistakes his predecessor made in a similar drive that prompted beef shortages and stoked a politically-damaging corruption scandal.
Despite past missteps, Widodo's government has adopted an increasingly nationalistic approach to food policy as it looks to protect farmers.
Away from beef, Widodo has refused to allow rice imports despite prices for the grain climbing 30 percent year-on-year in February.
"There is certainly an uptick in nationalistic sentiment," said Wellian Wiranto, an economist at Singapore's OCBC Bank, when asked about food policy.
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