Disturbing evidence of the appalling conditions at some Indonesian abattoirs and the decision to ban Australian live exports to those facilities threatens to exacerbate an already delicate trade dispute between the two countries.

Over the past year meat exporters including Australia have raised objections to an Indonesian government decision to drastically reduce the quantity of imported livestock and packaged meat in an attempt to boost the local industry.

A recent report in Indonesian news magazine Globe Asia delved into the issue.

Last year Australian live cattle imports into Indonesia shrunk by more than 30%, and the quotas for this year have been limited to 500,000 head. The cuts form part of the Ministry of Agriculture’s plan for the archipelago to achieve beef self-sufficiency by 2014.

The import cuts go beyond live cattle exports — this year Indonesia reduced boxed beef imports by 58%, setting the cap at 50,000 tonnes. (In April, the figure was increased to 72,000.)

But the cut to imports have failed to stimulate the Indonesia cattle industry, which was ill prepared to fill the considerable gap. It has pushed up beef prices across Indonesia and prompted fears of food shortages.

As the Globe Asia article explains:

“What is clear is that the Indonesian government cannot handle increasing demand for beef while simultaneously curbing imports: Domestic production is simply not capable of filling the gap.

“A case in point occurred in September 2010 when beef prices in Jakarta skyrocketed ahead of the Idul Fitri holiday due to undersupply, which local traders blamed squarely on the agriculture ministry’s efforts to curb imports. The situation only got worse.

“Given higher prices and lack of supply, Indonesian cattle owners decided to make a quick buck by slaughtering breeding female cows to meet demand, dealing a major blow to government efforts to increase the country’s domestic herd size as part of its self-sufficiency blueprint.

“The Ministry of Agriculture rushed to pass a regulation banning livestock owners from slaughtering breeding females, but the damage had already been done. One meat importer estimates that ’80 per cent to 90 per cent of what’s been killed at the moment in Indonesia is productive breeding females’.”

Just how the animal welfare issue — and the Australian government’s decision to suspend exports to 11 abattoirs — connects to the trade dispute is open to interpretation.

Australia shipped $684.5 million worth of live cattle last year, with Indonesia accounting for a little under 60% of the trade, so the stakes are significant.

On one reading, the ban will serve as a shot across the bows at the Indonesians to make clear they do not hold all the power in determining export patterns. While the Australian government appears caught unawares by the issue, it seized the moment to make a point to the Indonesians.

But on another reading the Indonesians will be unfussed by Australia’s move, which only reinforces the logic behind its move towards self-sufficiency. The ban may even prompt the affected abattoirs to turn to Indonesian cattle, which will be subject to the country’s more relaxed approach to animal rights.

Either way, it is unlikely the Indonesians will be rushing to improve the conditions of its abattoirs.

That was certainly the message from Indonesia yesterday. According to news agency AAP, Indonesia’s deputy Agriculture Minister Bayu Krisnamurthi said the ball was in Canberra’s court.

“We are one of their biggest markets,” he said. “So it’s also their interest to make sure Indonesian market still will be open.”

An open market, indeed.