The PalmCow market chains team, including Dr Sionita Gloriana Gunawan (BPTP East Kalimantan), Dr Nyak Ilham (ICASEPS) and Associate Professor Christie Chang (UNE) completed a market chain study in East Kalimantan in January 2019, to understand the demand and supply of cattle and beef in the province, as well as relevant issues and concerns.
The team’s activities focused on interviews and consultation with inter-island traders, butchers, slaughterhouses, quarantine office and Dinas of livestock service/agriculture/plantation. These were held in key locations including Penajam Paser Utara, Balikpapan and Samarinda. PalmCow market chains team meetings were also held at ICERD and ICARD in Bogor.
Current situation in East Kalimantan
Total cattle production was estimated at over 120,000 head, spread across ten districts.
Beef consumption in 2018 has been estimated at 9,800 tonnes, however only approximately 25% of consumption is met by local supply, with the remainder being imported from other regions including NTT, NTB, Sulawesi and Java, in a mix of live cattle and frozen beef.
Bad weather during the December-February monsoonal season affects inter-island supply to meet this local demand, and increases local prices.
Increases in local cattle production are desirable to reduce these price and supply instabilities. To help address this need, the provincial government has plans in the next five years to develop livestock production in former mining sites, as well as significant increases in palm-cattle integration.
There are currently three districts with palm-cattle integration systems in place: Paser, Penajam Paser Utara, and Kutai Kartanegara. There are plans to develop approximately 1,000 ‘mini ranches’ (for example, ten Bali cows grazed on a five hectare site) across several districts.
Penajam Paser Utara is one of the sites selected in the province for PalmCow research. Approximately 70% of its current cattle demand is met via inter-island trade. Demand is seasonal, and is highest during Idul Adha and Idul Fitri. Many farmers target their cattle sales for these times of year when demand is higher, but otherwise will sell when they need cash. Butchers, beef retailers and wholesalers noted that demand for meat does not change much during Idul Adha, but demand for live cattle is much higher. These are slaughtered at the mosques for distribution to the poor.
The Indonesian government has recently invested in six cattle ships (such as the KM Camara Nusantara I, with a 500 head capacity) to improve the logistics of inter-island cattle trade, and reduce the price of beef. These ships have opened up opportunities for the wider community to bring cattle into East Kalimantan - a facility that was previously restricted to relatively few larger players.
Compared to other Indonesian provinces, frozen meat imports appear to have a significant impact on the beef market in East Kalimantan. Over the last several years, frozen beef and buffalo imports have grown significantly in the province, to the extent that the number of cattle slaughtered locally each day has declined markedly. Frozen meat is primarily used by supermarkets and the hospitality sector, though it is also becoming available at local wet markets to help stabilise wet market prices during times of high demand.
Local consumers appear to prefer more expensive grass-fed beef from a local breed, although their actual purchases are more likely to be driven by price. This means that consumers will purchase cross-breed beef, beef from feedlot cattle or imported frozen beef given these are usually cheaper products. This poses an interesting research question: ‘how much more are consumers willing to pay for fresh beef from local breeds compared to the other options?’
The provincial government in East Kalimantan is supportive of expanding palm-cattle integration to increase local beef supply, though there are currently some constraints in achieving this goal:
The supply of breeding cows.
The fact that plantation operators overall do not yet have sufficient staffing and technical knowledge for cattle farming.
Regional regulations do not yet designate many areas of land for cattle or buffalo production.
Currently, farmers tend to have a habit of selling their calves as quickly as possible rather than hold on to them for future breeding and herd expansion.
Many local people appear to be reluctant to become involved in cattle production.
Mining is a significant industry in the province, and currently provides a reliable alternative source of income to cattle farming for many locals.
Other issues identified during this study included that butchers tend to evaluate livestock weight visually rather than using scales; and that beef supply shortages to the province, especially from NTT, are associated with a range of factors including reduction in numbers available from inter-island trade, cattle becoming smaller (possibly due to breeding or feeding deficiencies), cattle being sold when they are not ready for slaughter, a long dry season, and large numbers of cattle being exported from East Kalimantan to other provinces.