37 – Australian grain and Australian beef to Indonesia

29 October, 2019

by Professor Ross Kingwell – AEGIC Chief Economist.


It is attractive, but unfortunately wrong, to think that although less grain is now exported to Indonesia, they nonetheless still benefit from the grain that Australian farmers produce, via the use of Australian grain rearing feed-lot beef sold to Indonesia. The reality is that the beef and live cattle purchased by Indonesia from Australia relies mostly on being grass-fed –  not grain-fed.

The Whole Story

Until recently, Indonesia has been Australia’s principal export market for wheat. In 2017, 5.17mmt of wheat was exported from Australia to Indonesia. But in 2018, as drought gripped eastern Australia, only 2.23mmt was exported to Indonesia. Worse still, as the drought lingered, up until August 2019, only 0.56mmt was exported from Australia to Indonesia. Australia’s share of the Indonesian wheat market has fallen from 70 per cent a few years ago to just 7 per cent in 2019. Wheat and other grains ordinarily exported from Australia to overseas markets have instead been sent to grain users in eastern Australia..

Historically, the main type of wheat Australia has exported to Indonesia has been low to mid-protein wheat, which is principally used to provide affordable calories in the form of instant noodles. However, as Australian wheat has become more expensive relative to wheat from other origins like Ukraine or Argentina, Indonesian flour millers have switched away from Australian wheat. As a result, Indonesia has imported 0.15mmt, 0.68mmt and 1.74mmt of Argentinian wheat in the years 2017, 2018 and the first six months of 2019, respectively. Indonesian flour millers and noodle manufacturers have learned how to produce instant noodles with higher shares of cheaper origin wheat, thereby reducing their dependence on Australian wheat.

The abrupt diminution of the flow of Australian wheat to Indonesia represents a major change to historical trade flows. But is Australia now just sending its wheat in another form? In other words, are Australia’s beef exports to Indonesia simply a more efficient, value-added way of sending Australian grain to Indonesia? Feed-lot beef, for example, effectively transforms grain into more highly valued meat.

In 2018 and 2019, when Australian wheat exports to Indonesia were dramatically waning, Australian beef exports to Indonesia have increased to 75,000 tonnes in 2019 (Fig 1), with further increases anticipated. Total beef consumption in Indonesia has grown by 24% over the last four years, with the OECD-FAO estimating a further 10% increase over the next five years.

In 2018-19, Australian exports of beef to Indonesia have comprised $690 million of live cattle, $274 million of frozen beef, $48 million of chilled beef and $106 million of beef offal, worth a combined $1.12 billion and making Indonesia Australia’s fifth most valuable beef market.

Are these exports of beef to Indonesia greatly supported and underpinned by grain-feeding in Australia? According to Spragg (2018), Australia’s beef industry absorbed 3.9mmt of feed grains in 2017-18. However, important though the Indonesian market is, it accounts for less than 15% of Australian beef, veal and live cattle exports, and less than 6% of turnover for Australia’s beef sector. Moreover, according to NSW DPI (2017), Cadence Economics (2017) and the MLA snapshot of beef exports to Indonesia, most beef exported from Australia is based on grass-fed beef; not grain-fed beef. The MLA (2018), for example, indicate that, of the 58,000 tonnes of beef exported to Indonesia in 2017-18, only 2% was grain-fed. Thus, in reality, the beef and live beef cattle exported to Indonesia account for a surprisingly small volume of Australian feed grain.

Thus, the answer to the question: Are Australian beef exports to Indonesia simply another indirect way of ‘exporting’ grain to Indonesia? is – No! Australia indirectly may be exporting its pastoral grasses but it is not indirectly exporting much of its grain via feed-lot beef sold to Indonesia.


Cadence Economics (2017) Australia’s recent meat export performance. Report for Food Innovation Australia Ltd. Available at: https://fial.com.au/Attachment?Action=Download&Attachment_id=48

MLA (2018) Market Snapshot: Beef to Indonesia. Available at https://www.mla.com.au/globalassets/mla-corporate/prices–markets/documents/os-markets/export-statistics/oct-2018-snapshots/mla-beef-market-snapshot—indonesia—oct-2018.pdf

NSW DPI (2017) NSW Cattle and Beef Industry Summary. Available at https://www.dpi.nsw.gov.au/__data/assets/pdf_file/0010/691579/NSW-Cattle-and-Beef-Industry-Summary.pdf

Spragg, J. (2018) Feed grain supply and demand report 2018: A report for the Feed Grain Partnership: JCSSolutions Pty Ltd.

More News

05 May, 2021

The world of noodles

Australian wheat is highly valued for noodles across Asia. The Asian noodle market represents over one-third of Australia’s wheat exports! Why Australian wheat? Flour millers across Asia prefer to buy Australian wheat for noodles. The combination of excellent noodle texture and colour attributes is unique to Australian wheat. White Australian wheat results in high milling yield […]

28 April, 2021


This post is current as of April/May 2021.  AEGIC is Australia’s leading organisation for market insight, innovation and applied solutions for the grains industry. We leverage our technical know-how, market insight and innovation capabilities to find and deliver practical solutions that create value for the Australian grains industry. We are currently building our technical capacity […]

27 April, 2021

AEGIC behind the scenes: Australian wheat for Asian bread

Asian diets are changing amid strong economic growth and increasing wealth. More and more consumers are recognising the benefits and convenience of baked products. Australia is well-placed to play a positive role in this change by understanding industry requirements. AEGIC’s bread research lab helps assess Australian wheat for Asian baking to get more of it into […]

21 April, 2021

AEGIC behind the scenes: Australian wheat for Asian noodles

The Japanese udon noodle market is Australia’s most stable premium wheat market. Japanese noodle lovers know what they like when they’re tucking into a delicious bowl of udon or ramen noodles. AEGIC runs a highly-trained udon noodle sensory evaluation program with the Japanese Flour Millers Association (JFMA) to ensure new Australian wheat varieties meet Japan’s strict requirements. […]

15 April, 2021

Enhancing noodle texture and colour

Asian flour millers prefer to buy Australian wheat for noodles because of its bright, stable colour and good texture. Thanks to a landmark AEGIC research project*, we know that noodle colour, colour stability, and texture are among the most important factors that flour millers look for when buying wheat for noodles. The research found that […]

13 April, 2021

50 – The Rise of the Middle Class

02 March, 2021

Whole grain for better health

Increasing whole grain consumption represents a major opportunity and challenge for the food industry. Extensive evidence now shows the connection between whole grain consumption and reduced risk of several chronic diet-related diseases. Greater intake of whole grains in the diet leads to reduced incidence of cardiovascular diseases, gastrointestinal diseases, cancer, and diabetes. To address this […]

26 February, 2021

AGIC Asia 2021 to reach Asian feed and whole grain buyers

The Australian Grain Industry Conference 2021 will feature a special session led by AEGIC on the benefits of Australian grains for animal feed, and the health benefits of whole grains for human consumption. AGIC Asia, which will be held virtually this year on Wednesday 3 March 2021, is a key date on the grain industry […]

05 February, 2021

Stimulating Australian feed grain demand in the Philippines and Thailand

Feed grain buyers in the Philippines and Thailand learned the compelling benefits of using Australian feed grains for swine following two well-attended AEGIC webinars this week. The webinars, presented in conjunction with Austrade, featured experienced Australian feed nutrition expert Tony Edwards as keynote speaker. The Philippines event attracted 150 representatives of the grain and animal […]