Jakarta. Two Indonesian agriculture companies have formed a joint venture with Brisbane-based livestock exporter Australian Rural Export, or Austrex, for a $10 million end-to-end meat processing company in South Sulawesi.

Agriculture firm Pramana Agri Resources and Bogor-based Rumpinary Agro Industry, which specializes in fattening and selling both local and imported cattle, signed the agreement with Austrex in Jakarta on Wednesday.

The signing event was followed by the joint venture’s principle license proposal submission to the Indonesia’s Investment Coordinating Board (BKPM).

“The three of us – Rumpinary, Pramana and Austrex – will each be bringing the best of our abilities [to the joint venture],” said Pramana Agri Resources director Robert Erizo Kusnadi in Jakarta on Wednesday.

“The business model will be integrated, from the animal feed supply to the fattening, up to the meat cutting and the beef box processing,” he added.

The three companies are currently still negotiating the ownership portion of the joint venture, although the majority stake will be owned by the two local companies, Robert said.

He added that the joint venture is scheduled to settle licensing over the next three months with operations to begin sometime in the second quarter of 2017.

The companies are still in talks with the provincial administration for a 5,000-hectare plot in Maros province, according to Robert, of which 30 hectares will be used as feedlot — an area where cows are fattened before they are butchered.

“In the first phase, we would have a feedlot capacity in the range of 10 [thousand] to 15,000 cattle,” he said.

The joint venture between Pramana Agri Resources, Rumpinary Agro Industry and Austrex is the result of the Indonesia-Australia partnership on food security in the red meat and cattle sector, a bilateral partnership that seeks to strengthen cattle trade between both countries.

“As co-chair of Indonesia-Australia partnership, I would like to express our happiness, gratefulness and pride to Jimmy and Djody [Koesmendro of Rumpinary Agro Industry] for bringing the vision of the partnership into reality,” BKPM deputy chief Himawan Hariyoga said.

“We believe the project will not only contribute to increasing Australia’s investment in Indonesia, but also contribute to the production capacity in beef, especially in South Sulawesi, and job creation.”

Data from BKPM reported that realized foreign direct investment in cattle farm and the meat procession industry stood at $3.1 billion between 2010 and the first quarter of the year, led by investors from Singapore at 19 percent. Meanwhile, local investors have only contributed Rp 13.4 trillion ($1.6 billion) to the sector during the same time period, according to BKPM.

GlobeAsia

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Source: The Jakarta Globe