When Indonesia slashed quotas on beef imports in 2011, the goal was to boost domestic production. But the ensuing shortage has pushed prices skyward, and fed a corrupt system where quotas go to the highest bidder. Several unscrupulous meatball producers were even caught secretly mixing pork with beef to keep costs low. An ongoing investigation by the anti-corruption commission (KPK) has toppled the president of the Prosperous Justice Party (PKS), who resigned after being accused of receiving kickbacks from executives of a major meat importer, Indoguna.
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Industry players said that endemic graft worsened after the government slashed import quotas in 2011 from 100,000 tones a year in 2011 to 40,000 tones last year and 32,000 tones this year. Some beef importers began bribing officials to get a share of the pie, and smuggled beef into the country. Indonesian Meat Importers Association executive director Thomas Sembiring told The Straits Times that so long as meat import quotas are imposed and enforcement is "not transparent", graft will remain a problem. "Bribery, corruption — it's already in their bone marrow. You have to cut down maybe two generations to get rid [of it]." The big problem, said Franky Sibarani, deputy secretary-general of the Indonesian employers association Apindo, is that there are no good numbers on demand and supply "and therefore, lack of enforcement of the quota."
Late last month, PKS president Luthfi Hasan Ishaaq resigned and was detained after his aide Ahmad Fathanah was caught with one billion rupiah ($103,000). The money was allegedly a bribe from Indoguna directors to Luthfi, who has influence with officials at the Agriculture Ministry led by fellow PKS member Suswono. Days after his arrest, Customs officers found 1.7 tones of undeclared wagyu beef in a raid at Jakarta's Tanjong Priok port, brought in by Indoguna. Importers said the process of securing a share of these quotas is opaque and open to abuse at various levels of government. Investigative magazine Tempo, which broke the story on corrupt practices in beef imports in 2011, reported last week that a businessman had been offered a slice of the quota if he was willing to pay 10,000 rupiah a kilo in bribes.
Since quotas were slashed two years ago, the price of beef for the public has more than doubled, on average, to hit some 100,000 rupiah a kilo.
In December, consumers were outraged when police and agriculture officials, acting on a tip-off, raided a factory in South Jakarta and found workers had mixed beef with pork, which is much cheaper, to make meatballs. Ultimately, critics said, the quotas should be reconsidered as local production is a long way off from meeting rising consumption.
"Indonesia cannot produce live cattle in time to cater to rising consumption from a growing middle-income group, foreign workers and tourists," Siswono Yudhohusodo, who is in the parliamentary committee on agriculture, told reporters. "The government needs to rethink its agrarian policy.