INDONESIAN feedlot operators who source cattle from Australia are under heavy pressure at the moment, however the underlying fundamentals of the business remain solid.
So says Greg Pankhurst, who has 30 years of experience in Indonesian feedlotting and today runs Lampung Livestock Consultancy and is president of the Queensland Live Exporters Association.
At the height of Indonesian demand during the past ten years, Australia has shipped as many at 800,000 head of mostly bos indicus feeder cattle to Indonesia but so far this year less than 100,000 have gone.
Right now, shipments have virtually come to a standstill, with importers not willing to take cattle knowing they will not likely have a foot and mouth disease vaccine for them until well into September.
Speaking at the Australian Brahman Breeders' Association conference held at the Royal Queensland Show in Brisbane this week, Mr Pankhurst said once feedlots had been able to vaccinate all their cattle, there would likely be a resurgence in demand.
"But that may be two months away and it will be too late for those cattle in Australia ready to go now," he said.
It's not just disease that is taking a toll on Indonesian feedlots - high Australian cattle prices, surging feed and fuel costs and pandemic-driven consumer inflation is biting hard.
However, Mr Pankhurst explained there were longer-term positives for Australia's live-ex trade and not just with Indonesia but with our second largest customer, Vietnam, too.
He felt Indonesian importers had the potential to take 1.5m head annually should some of their challenges ease.
"Consumption of beef in Indonesia is 2.3 kilograms per person per year, which is relatively small," he said.
"That would only have to lift an additional 0.5kg per person - three more beef patties a year - and we would need to find an extra 750,000 head of cattle to supply that need."
Vietnam, meanwhile, has taken up to 300,000 head in peak-demand years, mainly heavy slaughter mixed breed bulls.
The Vietnamese have provided a very strong market for big, entire animals out of northern Queensland.
High cattle prices are proving a demand dampener here too, Mr Pankhurst said.
In the past year, live-ex prices peaked at $5.50/kg out of Darwin, an all-time record, and while they have come back 20pc now, it's still a traditionally hefty rate.
Mr Pankhurst reported it appears the 'grey channel' of trade between China and Vietnam was re-opening, given increases in the price of pigs.
"When that happens, Vietnam usually take more cattle from Australia which is processed to send across the border to China," he said.
Both lumpy skin disease and FMD had been present in Vietnam for some time but had been controlled with good biosecurity and vaccination, Mr Pankhurst said.
"Vietnam is a market we should definitely concentrate on - it has massive potential," he said.
Reduced consumer buying power is affecting beef demand in both Indonesia and Vietnam, Mr Pankhurst reported.
"Indonesia has traditionally enjoyed relatively low fuel prices, typically about one tenth the price of fuel in Australia but now it is $1.70 a litre so the gap has closed," he said.
"At the same time, their cattle feed costs have dramatically increased. In 2005 we'd feed an animal for a dollar a day, now we are flat out getting out of it for $5 a day.
"A number of feedlots are now importing wheat from Australia to add to their rations."
Local cattle supply around 60pc of beef consumed in Indonesia and at the moment big numbers of local cattle that have FMD or LSD are being slaughtered at very cheap prices, which means those feeding Australian cattle have a lot of competition.
Imported Indian buffalo beef will also likely become cheaper because it will now be able to be sourced from additional regions, given Indonesia now has FMD itself.
However, the very high standard of feedlot infrastructure, outstanding animal welfare and the fact weight gains in Indonesian feedlots are on par with those in Australia does stand the business in good stead past current challenges, Mr Pankhurst said.
"Huge numbers of breeders becoming sick are being slaughtered, so it's likely they will be looking to Australia to supply breeders down the track," he said.
"Bos indicus type cattle will always be the preferred animal - they are accepted by the market and they handle the environment the best.
"Their dairy herd has also been smashed. Milk production is down 40 to 50pc. So there will also be a large requirement for dairy heifers to go to Indonesia in time."