Brett Cattle Pty Ltd v Minister for Agriculture [2025] FCA 597 | Case summary

Brett Cattle Pty Ltd v Minister for Agriculture [2025] FCA 597 | Case summary | Zoe

[49]

The Australian Meat and Live‑Stock Industry (Export of Live‑Stock to the Republic of Indonesia) Order 2011 (Cth) (the Second AMLI Order) was made by the Secretary on 7 June 2011: LJ[205]. It prohibited the holder of a livestock export licence from exporting livestock to Indonesia for the next six months: cl 4(1).
In the Liability Judgment, Rares J held that the Minister committed the tort of misfeasance in public office by unlawfully making the Second Control Order: LJ[395]. That conclusion has not been the subject of any appeal.
Rares J held that, if the Minister had exercised his powers lawfully, then instead of the Second Control Order, the Minister would have made a control order (an "Exceptions Order") framed as a general prohibition on exports of live cattle to Indonesia, with the power to grant exceptions as in the First Control Order: LJ[405]. The exceptions clause in the First Control Order authorised the Minister to grant an export approval if satisfied that the slaughter of animals at any of the otherwise prohibited places complied with relevant OIE recommendations: LJ[21], [126] and [127].
His Honour held that the Exceptions Order would have been made on 9 or 10 June 2011 (LJ[425]) and that it would have been "done ... in an orderly way after seeking to gain the cooperation of the Indonesian Government and others": LJ[405].
On 6 July 2011, the Minister made the Export Control Repeal Order 2011 (Cth), which repealed the First and Second Control Orders (cl 3), and the Secretary made the Australian Meat and Live‑Stock Industry (Export of Live‑Stock to the Republic of Indonesia) Order 2011 (No 2) (Cth) (the Third AMLI Order): LJ[237]. Accordingly, the Second Control Order was in place for a month: 7 June 2011 to 6 July 2011.
Also on 6 July 2011, the Minister approved the Export Supply Chain Assurance System (ESCAS): LJ[4]. Versions of the ESCAS were discussed with relevant Indonesian Ministers before it was approved: LJ[224]. In summary, the ESCAS required a "closed loop system", which complied with various animal welfare standards, in which cattle could be tracked from export until slaughter.
The Third AMLI Order repealed the First and Second AMLI Orders "and implemented a closed loop system under which the Secretary could issue a livestock export licence for Indonesia only if satisfied that the licence holder had in place arrangements to ensure that the consignment of live cattle would be the subject of transport, handling, slaughter and related operations that were in accordance with the OIE Code (cl 6(2))": LJ[237].
When the Second Control Order came to an end, shipments of live cattle to Indonesia resumed under the new ESCAS: LJ[4]. The first shipment left Australia on 10 August 2011.
Rares J made "provisional findings about damages": LJ[494]. His Honour concluded that about 88,000 additional cattle would have been imported by Indonesia in 2011 if the Second Control Order was not made and an Exceptions Order had been made: LJ[462]. His Honour determined the number of lost exports in 2011 by estimating the unused capacity of the supply chains consisting of Indonesian feedlots and abattoirs that could have met ESCAS requirements and finding that the exports that would have occurred in the lost export period were likely to have been equivalent to those that actually occurred as soon as each of the three importers obtained its first ESCAS approval: LJ[441] to [462].
On 18 October 2023, Rares J ordered that there be a hearing on the following discrete question relevant to damages (Separate Question):

[51]

The parties agreed that: (a) the Exceptions Order would have been put in place on 9 or 10 June 2011; and (b) the ESCAS would have been put in place no later than 27 June 2011, rather than 6 July 2011.
Although until closing submissions at the hearing of the separate question Brett Cattle had contended that more than 88,000 additional cattle would have been exported in 2011, by its closing submissions Brett Cattle accepted that only an additional 88,000 cattle would have been exported, consistently with what Rares J concluded. Only 2012 and 2013 remain at issue.
Brett Cattle contended that the Second Control Order caused Indonesia to respond in two ways which resulted in fewer cattle being imported in 2012 and 2013 than would have been imported under the "Exceptions Order Scenario". Those two ways were, in summary, that the Indonesian Government: (a) set lower import quotas for 2012 and 2013 than it otherwise would have set; and (b) enforced those quotas strictly. Brett Cattle did not contend that the quotas for the 2012 and 2013 years were by way of retaliation or retribution: T713.37-40. Rather, Brett Cattle's case was, in summary, that these responses were motivated by a perceived threat to Indonesia's food security.
It is convenient to summarise the Exceptions Order Scenario as one where an Exceptions Order (see [9] above) had been made instead of the Second Control Order. That summary was used by the parties and is used in these reasons. The Exceptions Order Scenario is more precisely defined as a scenario where, instead of: (a) the Second Control Order effective from registration on 7 June 2011; and (b) the ESCAS introduced on 6 July 2011, the following occurred: (i) an Exceptions Order was made on 9 or 10 June 2011; and (ii) the ESCAS was introduced no later than 27 June 2011. Again by way of convenient summary, the Exceptions Order involved a total ban on exports with the power to grant exceptions, whereas the Second Control Order involved a total ban on exports, without such a power. The First Control Order involved a ban on exports to 12 identified abattoirs.
For the reasons which follow, in the Exceptions Order Scenario, no more live cattle would have been exported in 2012 and 2013 than were in fact exported in those years.
Before turning to the facts in detail, something should be said briefly about the evidence.

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There were three statements of agreed facts (SOAFs), the first of which was tendered in the liability hearing. Much of the (voluminous) evidence on the separate question was documentary. This included agreed translations of various Indonesian laws, regulations, policies and other documents. It also included many communications between Australian government officials and some communications between Australian officials and Indonesian officials.
Five experts were called, two with expertise in Indonesian law and three with differing, but sometimes overlapping, expertise in economics.
Brett Cattle called Professors Lindsey and Butt, who together drafted two reports (L&B 1 and L&B 2): CBC20; CBC21; CBC23; CBC24. These two reports addressed various general aspects of the Indonesian legal system and specific laws relevant to the issues which arise in answering the separate question, particularly the importance of food security in Indonesia. Professors Lindsey and Butt gave their evidence concurrently. They did not disagree on any material issue.
The three economists provided opinion evidence relevant to the determination of the number of cattle which would have been exported in the Exceptions Order Scenario.
Brett Cattle called Mr Smith who provided two reports, Smith 1 (dated 8 September 2023) and Smith 2 (dated 13 December 2024): CBC22 and CBC27.2. Mr Smith is a practising economist and partner of the Deloitte Access Economics practice of Deloitte Touche Tohmatsu. Since 2022, Mr Smith has been the head of the Macroeconomic Policy and Forecasting Group of Deloitte Access Economics: CBC28.3 at [25]. The Macroeconomic Policy and Forecasting Group provides economic consulting services, which includes economic modelling, forecasting (including trade forecasting) and advisory services along with scenario and policy analysis to both public and private sector organisations: CBC28.3 at [29]. Mr Smith made various assumptions about Indonesian Government policy (in which he did not have expertise) and, on the basis of those assumptions, expressed views about the lower bound (Alternative 1) and upper bound (Alternative 2) of the number of cattle that would have been exported if the Second Control Order had not been made in the 2011, 2012 and 2013.
The Commonwealth called Professor Marx and Professor Malcolm.
Professor Marx is the Robert A Bandeen Distinguished Professor of Economics at the Fuqua School of Business at Duke University and a Partner at Bates White Economic Consulting: CBC25 at 692. She specializes in microeconomics, particularly the fields of industrial organization and applied game theory, with a research focus on collusion, auctions, and procurements. Professor Marx prepared two reports: Marx 1 (dated 14 June 2024) and Marx 2 (dated 3 April 2025): CBC25; CBC28.1. Marx 1 addressed Smith 1. Mr Smith responded to Marx 1 in Smith 2. Professor Marx expressed a view as to the number of cattle that would have been exported in 2011 if the Second Control Order had not been made. However, as noted earlier, Brett Cattle abandoned its case for the 2011 year in closing submissions, with the result that it is not necessary to consider Professor Marx's opinion in that respect.
Professor Malcolm is a Professor of Agricultural Economics in the School of Agriculture, Food and Ecosystem Sciences at the University of Melbourne. Professor Malcolm provided a report dated 14 June 2024 (Malcolm 1): CBC26. Mr Smith responded to Malcolm 1 in Smith 2. Professor Malcolm was retained to provide comments in relation to Smith 1. He did not express alternative views about the number of cattle that would have been exported in the Exceptions Orders Scenario, nor was he asked to.
The three economists prepared a Joint Report dated 12 March 2025 which set out in tabular form their respective responses to various propositions: CBC28. They gave evidence concurrently at the hearing.
Although it was initially foreshadowed by Brett Cattle that more lay witnesses would be called, ultimately evidence was given only by three lay witnesses.
The first lay witness was Mr Gregory Pankhurst, who at material times operated two Indonesian‑based cattle and beef importation companies, PT Agro Giri Perkasa (PT AGP) and PT Guna Prima Dharma Abadi. Mr Pankhurst operated these two companies with Mr Adikelana Adiwoso: T110-11.
The second lay witness was Mr Adiwoso. He has been the President of PT AGP since 2000: T159.34-6. Mr Adiwoso was responsible for maintaining the company's relationship with the Indonesian Government and industry: T160.1-4. As President of PT AGP, Mr Adiwoso had dealings with the Australian Embassy, including in 2010: T178.28-34. Mr Adiwoso founded the Indonesian Feedlotters Association (APFINDO) in 1992, an organisation that lobbies the Indonesian Government on behalf of the feedlotting industry: T160.6-12. APFINDO is governed by a collective of directors and a board of advisors (Advisory Board): T160.14-16. Mr Adiwoso was an Executive Director from 1992 to 1994. From 1994 to 2013, he was a member of the Advisory Board: T160.18-23, 162.27-33. Throughout that period, APFINDO would frequently engage with the Indonesian Ministry of Agriculture: T160.25-30. Mr Adiwoso was "mostly" involved in those discussions: T160.25-30. The Advisory Board (including Mr Adiwoso) interacted with APFINDO's constituent members to discuss the feedlotting industry, including forecasted national requirements for live cattle imports in a given year: T162.18-25.
The third lay witness was Dr Krisnamurthi. Dr Krisnamurthi was the Indonesian Vice Minister of Agriculture from 11 November 2009 to 19 October 2011 and the Indonesian Vice Minister of Trade from 19 October 2011 to 20 October 2014: SOAF 2 at [7].

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Live cattle have been imported by Indonesia from Australia for many years: SOAF 2 at [20]-[25]. During the relevant period all of Indonesia's live cattle was imported from Australia: SOAF 2 at [58]. To the extent it was permitted by Indonesian laws from time to time, importing from other countries was difficult for reasons of bio‑security and expense (particularly cost of transport). A substantial portion of Indonesia's total beef consumption was sourced from "boxed beef" imports. Indonesia imported boxed beef from Australia (69% market share), New Zealand (30%), the USA and Canada (together, less than 1%): CBD611 at 33081. The First Control Order, the Second Control Order, and the AMLI Orders, did not apply to the export of boxed beef from Australia to Indonesia.
The evidence referred to different types of live cattle imports: "breeders" (female cattle suitable for breeding); "feeders" (cattle between 250kg and 350kg suitable for fattening in Indonesia before slaughter); and "slaughter cattle" or "ready‑for‑slaughter" cattle generally weighing significantly more than 350kg: CBD410.1 at 17364-6. This case is concerned primarily with the export of "feeders" to Indonesia.
The total number of cattle exported from Australia to Indonesia fell in 2003 and 2004 and then grew from 2005 to 2009. It peaked in 2009. Exports then commenced a significant decline from January 2010 for almost a year, before the Second Control Order made on 7 June 2011. In 2009, 751,143 cattle were exported: SOAF 2 at [25]. In 2010, 514,935 live cattle were exported: SOAF 2 at [30]. That is, cattle exports by number reduced by 31.4% from 2009 to 2010. As explained below, the steep decline in live cattle imports in 2010 was driven by a renewed and concerted push by Indonesia to achieve self‑sufficiency in beef by 2014. Upon the introduction of its new beef self‑sufficiency program (2014 BSSP) in January 2010, Indonesia began reducing the number of cattle imported (from January 2010) and began enforcing a 350kg weight restriction (from March 2010): CBD162 at 3452; CBD166 at 3469. By weight, rather than number, the decline in live cattle exports between 2009 and 2010 must have been more than 31.4%.
Beef self‑sufficiency, along with self‑sufficiency in other foods, had been a longstanding Indonesian Government objective. However, January 2010 marked the beginning of a new beef self‑sufficiency program, the 2014 BSSP. The President of Indonesia had made a political commitment to that new program. Although estimates vary, about 35% of Indonesia's population were farmers and agriculture supplied 43% of Indonesia's employment: CBD614 at 33212; CBD1087 at 39333.
The 2014 BSSP sought to address past failings and was carefully planned and structured from central government through to regional and district bodies. The 2014 BSSP was supported by significant funding and financial support for farmers. The program was to be supported by a large number of Indonesian Ministries, with primary responsibility resting with the Ministry of Agriculture.
Beef self‑sufficiency meant achieving the goal of 90% of Indonesia's beef consumption being met from domestic sources: CBD410.1 at 17342. As is demonstrated by the 31.4% reduction in imports of live cattle (by number) between 2009 and 2010, and the contemporaneous evidence referred to below, Indonesia's push towards self‑sufficiency, which had begun in earnest around 18 months before the Second Control Order, had already seriously impacted Australian exports by the time of the Second Control Order.
The decline in exports from 2009 to 2010 continued in the first five full months of 2011, before the Second Control Order was made on 7 June 2011. The quota for 2011 was announced on 28 December 2010 at 500,000 cattle: SOAF 2 at [32]. From 1 January 2011 to 31 May 2011, exports to Indonesia totalled 203,505 cattle: CBG38. In the same period in 2010, exports totalled 249,166, representing a (further) decline since 2010 of 18.3% by number (and more by weight given restrictions were enforced from March 2010).
The decline between 2009 and 2010 and the further decline in the first five months of 2011 compared to the same period in 2010 were both consistent with Indonesia's earnest pursuit of its 2014 BSSP. The low numbers of exports in 2010, and in the first five months of 2011, were necessarily unaffected by the Second Control Order which had not yet occurred. If exports had continued throughout 2011 at the same average rate as the first five months of 2011, exports would have totalled 488,412.
The total of live cattle exports from Australia to Indonesia in 2011 was 412,057, comprising: 220,163 from January to 7 June 2011; no live cattle in July 2011 because of the Second Control Order; and 191,894 between August and December 2011: SOAF 2 at [36], [39], [41] and [42]. The total exports for 2011 of 412,057 were 87,943 head lower than the quota of 500,000 which had been announced for 2011. Whilst his Honour's reasoning did not proceed on this basis, the effect of Rares J's conclusion - that about 88,000 more cattle would have been imported than the 412,057 which were in fact imported - is that in the Exceptions Order Scenario a total of about 500,000 head of live cattle would have been exported, consistently with the quota for the 2011 year. Brett Cattle now accepts that conclusion and it is not challenged by the Commonwealth.
The 2012 quota was announced on 15 December 2011 for 283,000 head of live cattle: SOAF 2 at [44]. The quota was not filled in 2012, with only 276,295 head of cattle being imported that year: SOAF 1 at [18]; SOAF 2 at [47].
In 2013, 448,950 head of cattle were exported from Australia to Indonesia: SOAF 2 at [53].
In opening submissions, Brett Cattle provided the following aide‑memoire, showing actual cattle exports to Indonesia from 2005 to 2014:

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Achieving self‑sufficiency in beef production, along with certain other staple foods, had been a long‑standing Indonesian Government policy. In 1999, the Indonesian Government instituted its first beef self‑sufficiency program with the aim of achieving self‑sufficiency in beef by 2005: CBD250 at 5863. Self‑sufficiency in beef was not achieved by 2005.
President Susilo Bambang Yudhoyono was President of Indonesia for 10 years, from October 2004 to October 2014. In 2005, during his first term, a second beef self‑sufficiency program was commenced, with the aim of achieving self‑sufficiency by 2010: CBD250 at 5863. Self‑sufficiency in beef was not achieved by 2010.
On 5 February 2007, the Indonesian Government enacted Law 17 of 2007 on "Long‑Term National Development Plan of 2005‑2025": CBD513 at 31722. This implemented the "2005‑2025 Long‑Term National Development Plan", referred to as the "National RPJP". After referring to the economic crisis Indonesia faced in 1997, the National RPJP referred to poverty in Indonesia's agricultural sector, stating that "poverty will still need to be given serious attention in development over the next 20 years": at 31737. It was noted that "[t]he social economic condition of the people living in rural areas is generally much left behind compared with those living in urban areas" and that "the role of urban areas that was expected to induce the growth of rural areas has in fact provided an adverse effect on the growth of rural areas": at 31746.
Chapter IV.1.2 was titled, "Realizing a Nation that is Competitive" (at 31772) and, under the sub‑heading "Strengthening the Domestic Economy with a Global Orientation and Competitiveness", referred to objectives of developing rural areas, reducing poverty in rural areas, strengthening food security and improving the welfare of farmers: at 31774. It was contemplated that Indonesia would develop its international trade in a way which would include a measure of protection of its domestic interests with a view to "reducing poverty, reducing unemployment, developing rural areas, and protecting the national economy from unhealthy international trade practices": at 31777 [20]. In Chapter IV.1.5, the object of the food security system was described as being directed at maintaining the national food security and self‑reliance by developing the domestic production capacity: at 31793 [14].
On 30 January 2008, the Minister of Agriculture (then Minister Anton Apriyantono) issued a regulation (Regulation 7 of 2008) concerning "Terms and Procedures for the Import and Export of Semen, Breeding Livestock and Beef Livestock": CBD514. As revealed by the terms of the regulation, it was introduced after "considering" domestic needs and "in an effort to increase state foreign exchange earnings" which "can be done through the import and export activities": at 31809. Amongst other things, the regulation contemplated that import permits could be issued for beef livestock with a maximum weight of 350kg (and a maximum age of about 1.5 years): CBD515 at 31836. As will be seen, the weight restriction was not apparently enforced until about March 2010: CBD162 at 3452; CBD166 at 3469.
On 4 June 2009, the Indonesian Government enacted Law 18 of 2009 concerning "Animal Husbandry and Health": CBD286.1 at 7883. The improvement of the welfare of farmers and the community was an aim of regulations on animal husbandry and health: art 3 at 7842. Law 18 of 2009 included laws:

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President Yudhoyono was re‑elected to a second term in the presidential election in July 2009. He was sworn into office on 20 October 2009. Indonesia's second cabinet was then sworn in.
President Yudhoyono had made a political commitment to deliver food security through self‑sufficiency: T235.34 (Dr Krisnamurthi). This involved increasing domestic production, modernising the agricultural sector and addressing the welfare of farmers, including through an increase in income. The significance of this political commitment is difficult to overstate, not only because food security is constitutionally entrenched. The evidence indicated that a substantial proportion of Indonesians were either employed directly in, or were provided employment by, the agriculture sector. One estimate was that "labour‑intensive agriculture has a dominant role in the economy, accounting for approximately 12.4% of GDP and provided employment for 43% of the population": CBD614 at 33212 (March 2011).
The Special Adviser to the President on Food Security is reported as having stated in late 2012 that 35% of Indonesia's working population were farmers and a large proportion of those were living under the poverty line: CBD1087 at 39333 [8]. He was also reported as stating at that time that it was "politically ... very difficult to increase the import quota on beef and cattle, as the government needed to be seen to protect farmer's interests": at 39333 [8].
Poor Indonesian rural households derived around half of their income from agricultural activities: CBD527 at 32391. Small‑scale subsistence farms accounted for about 87% of total cultivated land: CBD614 at 33212. Around 75% of farms in Indonesia are less than one hectare in size: CBD614 at 33179. Of those small‑scale farmers, estimates suggest around 6.2 million were livestock farmers: CBD1152 at 40679.
Minister Suswono became the Minister of Agriculture in Indonesia's second cabinet. He was tasked by President Yudhoyono with addressing food security, regional food self‑sufficiency, farmer income and addressing the sustainability and modernisation of Indonesian agriculture: T236 (Dr Krisnamurthi). Minister Suswono was a member of Indonesia's conservative Prosperous Justice Party (PKS), the support base of which had traditionally been smallholders and farmers: CBD166 at 3477.
In summary, as at late 2009 and early 2010, Indonesia's revitalised push towards self‑sufficiency in beef was motivated by a variety of considerations, including: the constitutionally entrenched obligation of the Indonesian Government with respect to food security; Indonesia's longstanding desire to achieve self‑sufficiency in various agricultural products including beef; addressing poverty in Indonesia's agricultural sector (CBD513 at 31737, 31746, 31777); improving the welfare and income of farmers and accelerating rural economic growth (CBD286.1 at 7842, 7885; CBD410.1 at 17338, 17393, 17421; CBD527 at 32391, 32457); and economic considerations, including increasing Indonesia's foreign exchange earnings or preventing a draining of foreign exchange reserves (CBD514 at 31809; CBD410.1 at 17421, 17437) and increasing state earnings (CBD286.1 at 7885).
Various Indonesian Government publications and regulations made in January and February 2010 are relevant to Indonesia's revitalised push towards beef self‑sufficiency, including:

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The Introduction referred to President Yudhoyono's previous beef self‑sufficiency program, noting that it had not received adequate financial support and that it faced a number of other challenges: CBD410.1 at 17337. It noted the President's support for the 2014 BSSP.
The Blueprint was to be used to direct operational activities; provide comprehensive targets; set benchmarks as indicators of success; and provide a reference for required resources, "especially the provision of multi‑year funding": CBD410.1 at 17338-9. The Blueprint recognised that the implementation of the 2014 BSSP needed political support from legislative institutions, policies with stronger legal force, and the participation of governments and all components of society at the central and regional levels: at 17339.
Although the Ministry of Agriculture took the lead role in the 2014 BSSP, the Ministry of Agriculture was "expected to be able to mobilise and increase the role of other ministries" including the Ministry of Finance ("by providing funds in the budgets to stimulate livestock businesses or to implement all government programs"), the Ministry of Banking ("by providing capital loans with their interest subsidised by the government, or providing capital loans through other different schemes"), the Ministry of Industry, the Ministry of Trade ("by controlling the distribution and marketing of livestock and its products at home and overseas"), the Ministry of Cooperatives and SMEs ("by providing credit assistance to small and medium scale farmers"), the Ministry of State‑Owned Enterprises and the Ministry of Energy‑Mineral Resources ("by supporting the use of CSR funds from large government‑owned companies (which operate outside the agricultural/livestock sector) for the development of livestock businesses"): CBD410.1 at 17392-3.
The Blueprint contemplated substantial measures, and funds, to achieve beef self‑sufficiency, including providing incentives, facilitating credit schemes with low interest (KUPS) and "continuing the pro‑poor programs for small/medium scale breeders through APBN (National Budget) / APBD (Regional Budget)": CBD410.1 at 17387 (emphasis omitted). The Blueprint contemplated that funding "will continue to be increased" (as in fact happened) and that funds would not only come from the APBN of the Ministry of Agriculture but also from funds from other Ministries such as the Ministry of Social Affairs, the Ministry of Manpower and Transmigration, the Ministry of Cooperatives and SMEs and the Ministry of Energy and Mineral Resources: at 17387-8.
The Blueprint contemplated providing direct funding to farmers through cattle breeding business loans (at 17327 at [6]), developing incentives for both upstream and downstream activities (at 17384-5), stimulating farmers "so that they will develop the local cattle farming businesses" and providing support: at 17421.
An objective underlying the Blueprint was to accelerate rural economic growth and increase the income of farmers, whilst balancing this against the cost to consumers. The strategy was "not solely oriented at meeting consumer needs by controlling imports (cattle and beef) but [was] more directed to the context of increasing production, welfare of farmers, and sustainability of cattle breeding businesses as well as increasing production competitiveness, to reduce dependence directly or indirectly on imported beef and feeder cattle": CBD410.1 at 17338 (emphasis added).
As other documents make clear, a "fundamental" (CBD412.1 at 20690) aspect of the strategy comprising the 2014 BSSP was to keep cattle prices high to improve farmer income and promote livestock farming generally. Thus, "[p]olicies on pricing and trade must be able to provide assurance to businesses to enable beef prices to remain attractive but still affordable": CBD410.1 at 17342.
Another reason for controlling imports was that "[d]ependence on imported beef and feeder cattle to meet domestic consumption could undermine efforts to improve domestic capabilities": CBD410.1 at 17346. Dr Krisnamurthi agreed that it was part of the design of the Blueprint to decrease imports and increase local production: T257.45-258.11.
It was recognised that "[p]rotection for small farmers and businesses in general in the context of international trade can [be achieved] by taking advantage of non‑tariff measures, such as ASUH [Aman, Sehat, Utuh and Halal, meaning Safe, Healthy, Whole and Halal: CBD410 at 17193; CBD410.1 at 17343] and SPS [Sanitary and Phytosanitary Agreement]": at 17342. The Blueprint was replete with references to the use of both tariff and non‑tariff (such as bio‑security) barriers, or policies, for the "protection" of local farmers and businesses: CBD410.1 at 17342, 17366, 17358.
After referring to the fact that "current imports of beef and feeder cattle are very large (30 percent of national beef demand)", the Blueprint observed that increasing imports "severely reduce[d]" Indonesia's foreign exchange: CBD410.1 at 17326. It was further observed that "[i]f we are not cautious of this situation, it could place this country farther from the independence and sovereignty over the issue of animal‑based food, especially beef, that we have been expecting, which in turn may lead us to fall into the food trap of exporting countries": at 17336.
The Blueprint contemplated import restrictions, or "controlling imports" (CBD410.1 at 17338), as one of the measures which would be implemented to achieve self‑sufficiency: at 17326, 17356 ("policies are needed to regulate import volumes").
As has been mentioned, the Blueprint contemplated five "main activities" and thirteen "operational activities": CBD410.1 at 17327 at [6]. The fifth main activity was "[r]egulating the domestic stocks of beef": at 17436. A stated justification for the fifth main activity was that "imports have ... harmed local cattle farming businesses": at 17436. The Blueprint contemplated preventing harm to local cattle farming businesses caused by imports by introducing "regulations, guidelines, instruments, and incentives that are able to provide a conducive atmosphere for the development of competitive beef cattle agribusiness in a sustainable manner": at 17436.
Within the fifth main activity, the twelfth "operational activity" was "regulating the stocks of feeder cattle and beef": CBD410.1 at 17437. The stated aim of the twelfth operational activity was "to implement more conducive regulations in feeder cattle imports, so that they: (i) comply with the SOP's [guidelines] in place, and (ii) follow correct quarantine procedures": at 17437. The "action programs" included "[s]upervising and monitoring feeder beef cattle import activities in accordance with the existing regulations and legislation", "[d]eveloping regulations at the Ministerial level on the import and export of beef cattle and their breeder cattle; as well as developing and disseminating the guidelines (SOP) for importing feeder cattle": at 17417.
The twelfth operational activity also included, as an action plan in relation to boxed beef, "[r]efining and enforcing the Minister of Agriculture's regulations on beef imports": at 17438.
Dr Krisnamurthi agreed that the Blueprint contemplated that there needed to be regulations and policies to regulate and reduce imports: T254.38-255.12.
Indeed, the Blueprint contemplated as a "prerequisite for success" (CBD410.1 at 17455), "[i]mplementing cattle and meat import control regulations correctly and consistently by referring to statutory regulations": at 17457. The Blueprint contemplated refining or reviewing existing import regulations, or improving or adapting Ministerial Regulations that were not "aligned with the intention or philosophy of the 2014 BSSP", to realise the beef self‑sufficiency plan: at 17369-70. As will be seen, regulations were introduced in September 2011 (see [271] below).
Consistently with the desire to enforce existing regulations, the Blueprint contemplated, in relation to "Policies and Legislation", that "feeders" of an initial weight of less than 350kg would be "fattened" in Indonesia for three months or more: at 17374-5. As noted earlier, Regulation 7 of 2008 imposed a weight restriction of 350kg on imported cattle. This regulation was enforced from March 2010 after the Blueprint was published: CBD162 at 3452; CBD166 at 3469. The Blueprint noted that "[f]attening will provide added value and create jobs": at 17368. The cost of feed in Indonesia was relatively low: at 17368.
The Blueprint contained a detailed organisational and operational structure from the "Central Level", through to the "Provincial Level" and the "Regency/City Level" to the "Sub‑District Level", which contemplated a "Technical Task Force in each sub‑district area": CBD410.1 at 17445-50.
The Blueprint noted that Indonesia's cattle population had increased from 2005 (10.6 million), with sharp increases in 2007 and 2008, but a slower increase in 2009 (12.61 million): CBD410.1 at 17348.
The size of the domestic herd was used in the Blueprint as a central consideration in determining when sustainable self‑sufficiency would be achieved. The Blueprint was based on a cattle population in 2009 of 12,610,100 and contemplated that cattle numbers would be 14,231,700 in 2014, when beef self‑sufficiency (at 90%) would be achieved: CBD410.1 at 17400-402 (Table 8). The Blueprint contemplated increasing productivity including through artificial insemination (AI) and breeding programs, reducing slaughter of productive female cattle and slaughter of cattle at a sub‑optimal weight: at 17326-7 at [2], [5], [6], 17385.
The Blueprint contemplated holding a special census of cattle numbers around June or July 2011: CBD410.1 at 17357. Indonesia conducts an agricultural census every 10 years and has done so since 1963: CBD471 at 25693. As at early 2010, the next agricultural census was to be held in 2013: at 25693. As at January 2010, the pursuit of beef self‑sufficiency by 2014 was sufficiently important to warrant an extensive earlier and more specific census. The Blueprint set out nine "pre‑requisites for success", the seventh of which was: "It is absolutely essential that the Indonesian Livestock Census (STI), especially on cattle, be carried out so that there is a clear basis in evaluating the success of the 2014 BSSP program": CBD410.1 at 17457.
The Blueprint referred to the fact that Indonesia relied solely on Australia for its live cattle imports and recorded that it was "necessary to consider other countries or sources, while still paying attention to" the risk of exotic diseases: CBD410.1 at 17361.
The Blueprint recorded that, between 2004 and 2006, the proportion of imports of offal to beef had been "rather high" and that, as a result, the government implemented a policy in 2007 to reduce the types of offal from eight types (heart, liver, tripe, intestine, spleen, lung, kidney, and testis) to two types (cow's heart and liver): CBD410.1 at 17362. The Blueprint stated that it was "hoped that future imports of offal can be reduced or minimised" or even banned altogether: at 17362.

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On 28 January 2010, Minister Suswono made Regulation 15 of 2010 about the "Ministry of Agriculture's 2010‑2014 Strategic Plan" (2010 Strategic Plan which was dated 29 January 2010): CBD412.1 The 2010 Strategic Plan is a lengthy and detailed document and addresses numerous agricultural activities, including by identifying production targets for 40 agricultural products: CBD412.1 at 20621-2.
The foreword to the 2010 Strategic Plan identified "achieving self‑sufficiency and sustainable self‑sufficiency" as the first of four "main targets": CBD412.1 at 20610. The fourth "main target" was "increasing farmer welfare": at 20610. The second and third main targets were increasing food diversification and increasing added value, competitiveness and exports: at 20610. A later edition of the 2010 Strategic Plan noted that the target of increasing farmer welfare is "determined by the success of three other success targets", being the first three main targets: CBD414.1 at 21668.
Chapter I of the 2010 Strategic Plan contained a lengthy and detailed introduction: CBD412.1 at 20628. After an introductory paragraph, it explained that "the Ministry of Agriculture will position rice, corn, soybeans, beef, and sugar as the five main food commodities": at 20628. According to the 2010 Strategic Plan, rice and corn were already in a position of self‑sufficiency and accordingly they were targeted for sustainable self‑sufficiency: at 20628.
Chapter II summarised the Ministry's vision, mission and aims: CBD412.1 at 20657. Chapter III appeared after a title page "Five Main Food Commodities 2010‑2014": at 20658. Box 3.1 addressed the four main targets: at 20661. As to the first, it identified the main target of achieving self‑sufficiency in soybeans, sugar and "[b]eef and buffalo meat: production of 0.66 million tonnes in 2014 (average increase of 7.13% per year)" and sustainable self‑sufficiency in rice and corn: at 20661. As to the third main target, it identified amongst other things increasing the balance of trade surplus from US$24.3 billion (2010) to US$54.5 billion (2014): at 20661. As to the fourth main target, it identified "increasing farmer welfare" through government and private investment and support from other Ministries and institutions that support farmers: at 20661.
Table 3.1 identified the targets in the following way, with a target for beef increasing at an average of 7.3% per year, consistently with the National RPJM (CBD412.1 at 20662):

[116]

Under the heading "Revitalisation of Farmer Financing", Chapter IV referred to the problem faced by livestock farmers of access to capital and identified that efforts were needed to optimise existing credit schemes including the Cattle Breeding Business Credit (KUPS): CBD412.1 at 20709-10. KUPS is a credit scheme provided by Banks to livestock business actors (groups/group associations, cooperatives and companies) supported by government subsidies: at 20679. The credit term is six years with a grace period of two years: at 20679. In addition to KUPS, there was a credit scheme with guarantee facilities (KUR) available in relation to all agricultural commodities: at 20679.
The 2010 Strategic Plan observed that much of Indonesia's labour force worked in the agricultural sector and that it was the focus of labour absorption: CBD412.1 at 20696. It recorded that, in 2010, the agricultural labour force was 43,713,000: at 20696. Indonesia's population in 2010 was around 242 million: CBD241; CBD258. Accordingly, around 18% of Indonesia's total population was working in the agricultural sector. As mentioned earlier, roughly 35% of Indonesia's working population were farmers: CBD1087 at 39333 [8].
Chapter V addressed the activities and financing of the agricultural development programs in the Ministry of Agriculture: CBD412.1 at 20715. It stated that achieving beef self‑sufficiency was the fourth of twelve programs "being implemented by the Ministry of Agriculture for the 2010-2014 period": at 20716. Each "Echelon I" official within the Ministry of Agriculture had one program, reflecting the name of the Echelon I organisational unit: at 20717. The Directorate General of Livestock was responsible for achieving beef self‑sufficiency: at 20719.
Part 5.2 in Chapter V addressed "Financing of Agricultural Development": CBD412.1 at 20722. Most of the investment required was to be sourced from the private sector, banks and the public: at 20722. Around 10 to 15% "of the budget is provided by the government either through the APBN or APBD": at 20722. Table 5.1 identified the "Ministry of Agriculture's 2010-2014 APBN Financing Needs" at 6,571.3 billion rupiah for the program to achieve beef self‑sufficiency and to increase the supply of Safe, Healthy, Whole, and Halal (ASUH) animal foods: at 20722. Table 5.1 is a summary of the totals explained more fully in Appendix 50: at 20793.
Appendix 50 set domestic beef production targets for 2010 of 70.2%. The targets for the following years were 75.53% (2011), 80.5% (2012), 85.29% (2013) and 90% (2014). Item 6 in Appendix 50 provided a breakdown of funding for the beef self‑sufficiency program and increasing the supply of ASUH animal foods: at 20816‑8. Appendix 50 also referred in Item 9 to funding for research and development for the "[a]cceleration of the Beef Self‑Sufficiency Production (P2SDS) Program": at 20824. The P2SDS is also referred to in Chapter III of the Blueprint where it was stated (CBD410.1 at 17391):

[137]

The actions identified in the Blueprint, 2010 Strategic Plan and the Guide were implemented from January 2010, consistently with the desire (and Presidential Instruction to all levels of government) to accelerate the program in its more organised and better funded way. The number of live cattle import permits were significantly reduced from January 2010. While import permits were still being released, they were for a shorter duration and most importers were not able to import the number of cattle they had requested: CBD166 at 3469. Other issues also arose, such as import permits being found to be invalid, demonstrating a stricter enforcement by Indonesia of its laws and regulations, consistently with what had been stated in the Blueprint, Guide and 2010 Strategic Plan.
Before March 2010, Australia had supplied consignments of both "slaughter" and "feeder" cattle: CBD166 at 3474. Industry estimated that between 20 to 30% of cattle exported to Indonesia had been between 400 and 450kg in 2009: at 3474. In pursuit of the renewed push for self‑sufficiency, the 350kg limit in Regulation 7 of 2008 was enforced from about March 2010: CBD162 at 3452; CBD166 at 3469.
Dr Krisnamurthi agreed that, from early 2010, the Indonesian Government took a more restrictive approach to the granting of import permits in pursuit of its self‑sufficiency policy: T241.03-242.15. The reduction in import numbers, and the enforcement of the 350kg weight restriction, was having a serious impact on the number of live cattle exported from Australia to Indonesia: CBD166 at 3468. This was the topic of trade and inter‑governmental discussions between Australia and Indonesia throughout 2010 and into 2011.
In March 2010, Minister Burke (then the Minister for Agriculture, Fisheries and Forestry) and Minister Suswono held bilateral discussions at the Northern Territory Cattlemen's Association Annual Conference in Darwin: CBD166 at 3474. An attachment to a Minute dated 30 November 2010 in relation to Minister Burke's meeting and surrounding events, later provided to Minister Ludwig, recounted that importers were securing only around 30 to 40% of permits sought and that there had been a sharp decline in Australian exports to Indonesia (at 3474):

[140]

I understand that in a recent inspection of live cattle being discharged at the Indonesian port of Tanjung Priok, Indonesian authorities identified that an import permit for part of a shipment of live cattle from Australia (2200 cattle) was not valid. I also understand that Indonesian authorities are working with the importer to resolve the issue.

...

Separately, I am advised that the most recently issued import permits have included a weight restriction of 350kg per animal. Australia is a key supplier of live cattle to Indonesia. I believe that without a common understanding regarding Indonesia's import requirements and compliance mechanisms the sustainability of the trade will be compromised. The Australian Government and industry are interested to find a practical and cost effective way for this new condition to be met. As a priority the Australian Government would like to work with the Indonesian Government to establish an agreed understanding on meeting Indonesia's requirements.

I would also like to raise my concerns about Indonesia's restrictions on import permits for Australian live cattle. You may recall I raised the issue with you during our discussions in March at the Northern Territory Cattlemen's Association Annual Conference in Darwin. The potentially significant effect on the live cattle trade from Australia is of increasing concern to the Australian Government and industry.

Based on your assurances that Indonesia's restrictions on import permits for live cattle were not an attempt to restrict imports, but rather a move to refine the import permit system to facilitate more accurate forecasts of expected imports of live cattle, it was expected that new import permits would be issued in April. However, my department and Australian industry representatives inform me that in recent weeks, many importers have experienced difficulties obtaining import permits. Furthermore, it appears that import permits that have been issued are for around 30 to 40 per cent of the quantity requested.

[158]

Presidential policy directive for Self Sufficiency

Indonesian President Yudhoyono's administration is aiming to attain self‑sufficiency for five key agricultural commodities: rice, corn, sugar, beef and soy.

Agriculture Minister Suswono has also been tasked with overcoming a number of agricultural challenges, including food security, regional food self sufficiency, increased agricultural productivity, stronger agricultural sectors, greater prosperity for farmers, more precisely targeted subsidies, a more favorable balance between agricultural imports and exports, increased production of livestock, intensified cooperation with other countries and the eradication of corruption.

To achieve the goals of the administration, Indonesia is actively seeking greater foreign investment in its agricultural sector (including from Australia) as well as increased capacity building initiatives.

Although Indonesia needs inputs in the form of agricultural imports to achieve its self‑sufficiency goals, Suswono is currently pursuing a highly political agenda to appease domestic interests which compete with imported product. Suswono is also influenced by Indonesia's conservative Prosperous Justice Party (PKS) of which he is a member. The PKS's support base has traditionally been made up of smallholders and farmers.

Suswono's agenda is impacting on Australia and has included the implementation of a food safety regulation for plant products, which had the potential to significantly increase costs for exporters, a proposed ban on all offal imports, weight restrictions on imported live cattle, and proposed new import regulations for dairy products.

This trading environment is making it difficult to convince Australian industry to invest directly in Indonesia or to provide support for capacity building initiatives.

Indonesian media reports on the volume, and in some instances the legality and food safety, of Australian product entering Indonesia have perpetuated anti‑Australian sentiments among some elements of the Indonesian population. Conversely, however, some sections of the Indonesian media have also highlighted resistance to the Indonesian Government's prioritisation of foreign investment in agriculture, in particular from Australia, over local farmers and domestic investors. This resistance has come from both Indonesian agricultural industry bodies and a number of Parliamentarians, including the Chairman of the Advisory Body of the Indonesian Farmers' Association and, interestingly, the Deputy Chairman of DPR Commission IV.

Commission IV, who's [sic] former Deputy Chairman was Minister Suswono, is the parliamentary body responsible for agriculture, plantations, maritime affairs, fisheries and food in Indonesia's House of Representatives. It has significant influence, harbours protectionist views and is pursuing an agenda aimed at increased food security with a reduced reliance on Australia, which they perceive as monopolising the agricultural market. There have been recent calls from Commission IV to ban all offal imports, stop cattle and beef imports where growth hormones have been used, and introduce a lower weight limit on imported cattle. Recently, Parliament passed a law reducing foreign ownership of companies in Indonesia's horticulture industry from 80 per cent to 30 per cent.

Conversely, there have been calls from some elements of the Indonesian Government that Suswono's focus on self‑sufficiency has contributed to a shortfall of quantities of live cattle and meat available to Indonesia consumers, and a subsequent spike in the related pricing of these commodities ‑ particularly during the 2010 Ramadan period.

[168]

In addition to discussions with his counterpart, Dr Mari Pangestu, Dr Emerson met the Coordinating Minister for Economic Affairs, Mr Hatta Rajasa, as well as senior representatives of the Australian and Indonesian business communities and industry associations and members of the Indonesian Parliament. Key issues raised at meetings were ... problems in the boxed beef and live cattle trade.

2. In a private meeting between the two Ministers (with key officials present) in advance of the Trade Ministers' Meeting (TMM), Dr Emerson raised concerns about market access for live cattle, boxed beef and offal, including the detention of large amounts of boxed beef at the Jakarta docks for a period of months, and problems associated with the 350kg weight restriction on live cattle exported to Indonesia. Dr Pangestu said Indonesia was currently reviewing its regulation of the trade and the Ministry of Trade would take over the issue of permits, resulting in greater transparency. She said she would do what she could to resolve the current difficulties, especially on boxed beef.

...

9. In a subsequent meeting with the Coordinating Minister for Economic Affairs, Hatta Rajasa, Minister Rajasa confirmed to Dr Emerson that the Ministry of Trade would assume responsibility from the Ministry of Agriculture for issuing permits for boxed beef and live cattle. Indonesia was conducting a review of its policy, and the final decision for import quota was to rest with Minister Rajasa's office. This would enhance transparency of the boxed beef trade. Minister Hatta said it would be "worth looking into" whether Indonesia could be more flexible on weight restrictions ...

Comment

...

15. On beef and live cattle, Dr Pangestu, Minister Hatta and Vice Minister Bayu Krisnamurthi all noted the review of Indonesia's policy and said the transfer to the Ministry of Trade of responsibility for issuing permits after June would improve the situation, though the transition might present difficulties in the short term. It remains unclear why the decision to shift responsibility has been made, and whether the Ministry of Agriculture will ultimately be obliged to cede power over allocation of permits on quotas. The transfer is highly unlikely to end the practice of determining quotas on beef and live cattle, with the political imperative of national self‑sufficiency taking precedence over the logic of securing supply to meet market demand.

(Bolding omitted.)

[190]

In summary, from 2003 to 2005 there had been a downward trend in live cattle exports to Indonesia. From 2005 to 2009, there was an upward trend, peaking in 2009. This upward trend was deliberately interrupted by actions taken by the Indonesian Government from early 2010 to reduce imports by number (from January 2010) and by weight (from March 2010) and to increase domestic production: CBD162 at 3452; CBD166 at 3469.
The level of imports in 2009 had been seen to have "harmed local cattle farming businesses": CBD410.1 at 17436. It was "fundamental to ensure that selling prices do not decrease", because the objective was to increase farmers' income and Farmer Terms of Trade and, thereby, farmer welfare: CBD412.1 at 20649-50, 20690, 20693, 20696, 20699. The deliberate reduction in imports was motivated by several often inter-related considerations apart from increasing the welfare and income of farmers (through beef prices), including food security, increasing Indonesia's foreign exchange earnings and reducing reliance on Australia. The strategies and actions in the Blueprint, Guide and 2010 Strategic Plan were being pursued at all levels of government and nothing in the evidence suggested that the 2014 BSSP would not continue.
Indonesia began reducing the number of cattle imported from January 2010 and began enforcing a 350kg weight restriction from March 2010: CBD162 at 3452; CBD166 at 3469. Live cattle exports had reduced by 31.4% by number in 2010 compared to 2009. When the weight restriction is also taken into account, the decline in live cattle exports between 2009 and 2010 must be more than 31.4%. The decline in exports continued in the first five full months of 2011, before the Second Control Order was made on 7 June 2011. From 1 January 2011 to 31 May 2011, exports to Indonesia totalled 203,505 cattle: CBG38. In the same period in 2010, exports totalled 249,166: CBG38. The difference in exports in the first five months of 2010 and 2011 represents a decline of 18.3% from the number of exports in 2010 (which itself had declined from 2009): CBG38.
The decline between 2009 and 2010, and the further decline in the first five months of 2011 compared to the same period in 2010, were consistent with Indonesia's earnest pursuit of its 2014 BSSP. The low numbers of exports in 2010, and in the first five months of 2011, were necessarily unaffected by the Second Control Order which had not yet occurred. If exports had continued throughout 2011 at the same (monthly) average rate as the first five months of 2011, exports would have totalled 488,412.

[201]

4 ... Krisnamurthi said he would speak plainly, as usual. He said until last night (6 June) he and Minister Suswono, as well as other colleagues, had seen this matter as largely an internal matter for Australia. He was aware that there were problems in animal welfare, but these were not exclusive to Indonesia ... Following the Australian Government's decision to implement a ban, this matter had ceased to be merely an internal problem for Australia and would now have an impact on Indonesia. Until this time the Indonesian Government had tried to restrain itself and not talk to the public. Indonesia wanted Australia and Indonesia to see each other as partners and not just as trading partners. Indonesia was not just a market, but was a partner, a neighbour and a friend. It needed to be treated as such.

5. ... We assured Krisnamurthi that we would seek to work cooperatively to help Indonesia meet international standards. Indonesia was an important partner and friend, and we understood Indonesia's domestic sensitivities. We should work together on this matter in the spirit of that strong partnership.

6. Krisnamurthi said he wanted to make several points. First, Indonesia depended to some extent on Australia for its food and food security needs. Indonesia sourced around 40 percent of its meat needs from Australia: that was how much Indonesia trusted Australia ...

8. Krisnamurthi said that, before last night, Indonesia had hoped a solution could be reached without harming the live cattle trade, notably as the peak demand period of Ramadan was less than one month away, followed by ld Ul Fitr ...

11. Krisnamurthi said he was likely to be approached by the media in the coming hours. We said we were keen to agree on points for the media for use by both sides to suggest that we were cooperating closely to resolve this difficulty. After the meeting we met with some of Bayu's key staff and drafted lines which have been provided to Canberra (see emails Lawson/Barton).

Comment

12. While clearly irritated at Australia's decision to suspend the trade, Krisnamurthi responded to our points professionally and with an eye to the future. He implied at several points that attitudes at the political level were less conciliatory. Krisnamurthi and Indonesia clearly want quick action to have some abattoirs recognised as meeting the appropriate standards and then, in their view, be eligible to receive Australian cattle.

[211]

On 9 June we (HOM) advised Cabinet Secretary Dipo Alam of latest developments in the suspension of live cattle trade to Indonesia in line with talking points. We said the issue may take some time to resolve and that expectations that approval would be given to recommence some of the trade in ten days were unrealistic ...

2. Alam said the Indonesian Government had partially prepared for the outcome as a result of the meeting between Mr Rudd and Foreign Minister Marty Natalegawa in Budapest. Alam said the Government understood Indonesia's livestock system was flawed and expressed interest in any proposals for technical assistance to improve standards. Alam agreed it was important the issue did not spill over into the broader bilateral relationship. We advised Alam on the plan for Deputy Secretary Glyde to come to Jakarta in addition to the team of officials and experts. Alam welcomed the visit and said the key was for the visit to take place as quickly as possible ‑ effective handling of this matter, for the time being, required speedy action.

...

8. Comments by the Indonesian Ministers and Government officials in Indonesian press on 9 June, including by Agriculture Minister Suswono, Trade Minister Pangestu and Coordinating Minister for Economic Affairs, Hatta Rajasa, have focused on reassuring the public that existing beef supplies will be adequate in the lead‑up to Ramadan. While noting that Indonesia will look at other sources of supply, Agriculture Minister Suswono gave public assurances that exports of frozen beef from Australia would continue. Trade Minister Mari Pangestu and Coordinating Minister for Economic Affairs, Hatta Rajasa, both emphasised the importance of bilateral relations between Indonesian and Australia. Director General for Livestock at the Ministry of Agriculture, Prabowo Respatiyo Caturroso, was reported in the Jakarta Globe online as saying "we have to respect the Australian Government's decision to stop its live cattle exports to Indonesia", saying also that there was "no plan to increase quote for frozen beef" ...

Comment

9. The current focus of the Indonesian Government is managing the domestic political dynamics and messaging to the public. While publicly talking about diversifying source of supply, the government is aware that its options are limited. The clear message to us is that an early visit by senior officials and experts from Australia will be important in managing these domestic dynamics, as well as in minimising the impact on the bilateral relationship.

[217]

Whilst no adverse inference is to be drawn in the circumstances, the fact is that there was no attempt to adduce and therefore no evidence from Dr Krisnamurthi about whether and why his reaction would have been different in the hypothetical scenario that, instead of the Second Control Order, an Exceptions Order had been made.
Dr Krisnamurthi also gave short and sometimes imprecise evidence of discussions with the Minister of Trade, the Minister of Finance and the Minister of Industry - see: MFI 23 [12]-[15]. He gave evidence about cabinet meetings and what was said by the President - see: MFI 23 at [16]-[18].
The Commonwealth objected to a number of aspects of the oral evidence of Mr Adisowo and Dr Krisnamurthi: MFI 23. One aspect of the evidence was the subject of an agreed limitation. I have ultimately concluded that none of the evidence objected to should be rejected (including the evidence at [206] above), the evidence being relevant to various factual issues and inferences to be drawn.
It is sufficient to state the following conclusions, drawn from a combination of the oral evidence and the contemporaneous documents. Mr Adiwoso met with Minister Suswono on 7 or 8 June 2011: MFI 23 at [4], [6], [7] and [8]. One matter which was discussed was Indonesia's food security and the impact of the Second Control Order on food security. Mr Adiwoso stated that Minister Suswono was "expediting" the cattle census. That may well be the case, but the speed with which the cattle census was being pursued was unrelated to the Second Control Order. As mentioned above, Memorandums of Understanding for the cattle census had been entered into earlier and the month‑long census had already commenced when the Second Control Order was made. The census had long been considered important to the success of the 2014 BSSP. Minister Suswono is likely to have stated that his desire was to rely on local cattle as Mr Adiwoso stated. Mr Adiwoso stated that Minister Suswono said he wanted "to remap supply - the supply of cattle, the industry itself". The contemporaneous documents indicated that one of the issues that needed to be addressed was the movement of domestic cattle in the context of supply to markets. Mr Adiwoso's evidence was generally consistent with the contemporaneous documents and what one would expect.
Di Krisnamurthi attended various meetings with other Ministers, with cabinet and with the President. It is clear from the contemporaneous documents, and consistent with what one would expect to happen in the circumstances which prevailed, that immediately after the Second Control Order was made, and in the weeks thereafter, the President and Ministers were concerned about the Second Control Order and the impact it would have on supply.
The Second Control Order had a duration of six months and, although it would have been realised relatively quickly by the Indonesian Government that the Second Control Order was unlikely to last six months, such an outcome remained possible until it was repealed. The Ministers sought to co‑ordinate a response and their discussions in this respect included discussions about obtaining supply of beef from countries other than Australia. It is likely that discussions covered the 2014 BSSP and the fact that the program involved reducing dependency on international supplies of beef and increasing domestic production. The President, and others, were concerned to make sure that there was adequate supply, particularly for Ramadan. It was soon established that there were adequate supplies for Ramadan because of the numbers of cattle then being fattened in Indonesian feedlots. Concern would naturally have shifted to supply for the post‑Ramadan period.
Mr Adiwoso, together with APFINDO's Advisory Board and Executive Director, met with the Director General of Livestock and Minister Suswono about a month (T175.7) after the Second Control Order had been lifted: MFI 23 at [9], [10] and [11]. Minister Suswono is said to have stated that "we" could not rely 100% on Australia and needed to find other sources of beef. This is likely to have been said.
There is no question that the Indonesian Government explored importing live cattle from sources other than Australia: CBD803 at 34341 [9] (16 June 2011); CBD319 at 9225 [5] (23 June 2011); CBD323 at 9241 (24 June 2011); CBD324 (27 June 2011). That proposal was broadly considered, including by Commission IV (CBD820 at 34432 [11]), Minister Suswono (CBD316 at 9110; CBD321 at 9235) and the Indonesian parliament: CBD824 (23 June 2011).
As has been noted above, exploring the question of whether cattle could be sourced from countries other than Australia was mentioned in the Blueprint. The Second Control Order caused that possibility to be considered, and considered more intently, in the period immediately after the Second Control Order. An Exception Order is likely to have had no materially different effect. In any event, Brett Cattle's case centres on the setting and enforcement of quotas, not the consideration of sourcing cattle from other countries, which could not have contributed to a reduction in cattle imports because it never eventuated.

[220]

I am writing further to our phone call of 7 June 2011, to let you know of the Australian Government's actions in response to issues of animal welfare relating to Australian cattle at a number of Indonesian abattoirs.

As you will be aware, there has been close consultation between our officials in Canberra and in Jakarta in the last week or so. I have asked that this close contact continue and be intensified.

I recognise that the Indonesian Government introduced regulations on animal welfare in 2009 and understand that it will take time to achieve their uniform implementation and compliance. However, I hope you will understand that the Australian Government needs to take action in response to the animal mistreatment which has recently been revealed. Therefore, until we are confident that acceptable animal welfare standards can be guaranteed, we have determined that the most appropriate course of action is to suspend exports of Australian livestock for slaughter to Indonesia. The suspension does not apply to the export of breeding cattle (which includes dairy cattle).

I recognise that this suspension will have an impact in Australia and Indonesia both at the commercial and consumer levels, and assure you I do not take this decision lightly. Indonesia is Australia's largest market for live cattle, particularly from northern Australia, and Australia has been a longstanding and reliable supplier for this mutually beneficial trade. However, the Australian Government is committed to ensuring acceptable animal welfare standards are met.

The Government has carefully considered all options for addressing animal welfare concerns for cattle exported for slaughter and will develop a system that requires absolute supply chain assurance from exporters for every consignment. While we will work as quickly as possible to develop such a system, it may take some time to do so.

I am still working through the details of the system that is to be established ...

I would like to assure you that the Australian Government is not singling out Indonesia ...

The agreement by our governments to cooperate in developing a longer‑term plan will help us to achieve the best possible outcome for animal welfare, our industries and the important relationship our countries share.

[227]

Brett Cattle emphasised the passages in bold in the quote above, submitting that these supported the view that the Indonesian Government: (1) considered that the Second Control Order threatened Indonesia's food security; and (2) strictly enforced quotas after the Second Control Order.
As to the first submission, it may be accepted that Indonesia was concerned about there being sufficient supply of beef, particularly post‑Ramadan. The documentary evidence makes it clear that there was sufficient supply of beef for the Ramadan period - see, for example: CBD803 at 34340 [7]. It is also clear from the evidence referred to earlier that Indonesia wanted live cattle trade to reopen as quickly as possible. This is made clear by subsequent events, including the import permits issued immediately after the ban was lifted.
As to the second submission, a difficulty is that Indonesia issued 352,500 import permits for live cattle in 2011 after the Second Control Order was repealed. The observation in the extract about not increasing the quota is an observation concerned with the boxed beef quota, not the live cattle quota. As the extract shows, Indonesia considered (or considered it useful to state) that the live export ban might be a ploy by Australia to increase boxed beef exports. The observation is not probative of Indonesia's enforcement of live cattle quotas in 2012 and 2013.
On 16 June 2011, Minister Emerson spoke with Minister Pangestu, summarised in a DFAT "Record of Conversation": CBD803. The "main subject" was the "principles for future trade in cattle to Indonesia, and domestic response to suspension in Indonesia": at 31339. Dr Emerson emphasised that the Australian Government was committed to reopening the live cattle trade to Indonesia: at 31339. He outlined the key principles under consideration to reopen the trade with Indonesia and emphasised that Australia was seeking to regulate Australian exports, not to regulate in Indonesia, nor accredit facilities in Indonesia and that these principles would apply to all markets, not just Indonesia: at 31339. Australia invited any feedback on the principles and sought views on taking the process forward: at 31339. Dr Emerson noted the possibility of Senator Ludwig visiting Jakarta in the near future: at 31339. The record included (at 34340):

[234]

Indonesian response to Australia's temporary suspension of livestock exports for slaughter

President Susilo Bambang Yudhoyono:

President Yudhoyono has made public comment on Australia's decision to suspend the live cattle trade, ordering an investigation into animal cruelty at the Indonesian abattoirs identified in the four corners footage. However, President Yudhoyono continues to push for Indonesian self sufficiency in beef by 2014.

Agriculture Minister Suswono:

Minister Suswono continues to use the media to voice the view that the suspension of the live cattle trade is a strategic trade tactic by Australia and could affect the broader bilateral trade and economic relationship. However, while highlighting the possibility of severe inflationary impacts that a ban on live cattle may have, Minister Suswono has been careful to reassure the Indonesian population that there will be no significant impact from a live cattle shortage before and during the Ramadan religious period.

Minister Suswono has also indicated that Indonesia is exploring alternative live cattle suppliers, such as India, and would facilitate trade from non‑Foot and Mouth Disease (FMD) free countries by changing its country‑based system to a zone‑based system. The possibility of such a move has been challenged by some senior Indonesian agriculture ministry officials. Minister Suswono has stated that the Indonesian [G]overnment has no plans to increase beef import quotas to meet consumer demand.

Vice Minister for Agriculture Bayu Krisnamurthi:

During meetings in Jakarta on 13 June 2011, Deputy Secretary Glyde indicated to Vice Minister Krisnamurthi that Australia was keen to work with Indonesia to restart the trade as soon as possible. Vice Minister Krisnamurthi has subsequently been reported in the Jakarta press as stating that the live cattle trade will resume in two to three weeks. Minister Krisnamurthi has also made a number of comments questioning the WTO consistency of the Australia's suspension of the live cattle trade.

Trade Minister Mari Pangestu:

Historically a friend to Australia, Trade Minister Pangestu has publicly noted that Australia's suspension of the live cattle trade is temporary and has reiterated Minister Suswono's position that there will be no significant impact from a live cattle shortage before and during the Ramadan religious period.

Coordinating Minister for Economic Affairs Hatta Rajasa:

Coordinating Minister Rajasa has suggested that Australia's suspension of the live cattle trade provides an important opportunity to improve animal welfare standards in Indonesia and to push ahead with Indonesia's self‑sufficiency aspirations.

Parliamentary Commission IV:

Parliamentary Commission IV, the body responsible for Agriculture in Indonesia's House of Representatives, has echoed Minister Suswono's view that the suspension of the live cattle trade is a strategic trade tactic by Australia and could affect the broader bilateral trade and economic relationship, also highlighting the possibility of severe inflationary impacts that a ban on live cattle may have. Commission IV representatives have also been quick to reassure the Indonesian population that there will be no significant impact from a live cattle shortage before and during the Ramadan religious period and to push Australia's suspension of the live cattle trade as an opportunity for Indonesia to become self‑sufficient in beef by 2014.

(Brett Cattle's emphasis.)

[246]

11. Senator Ludwig reiterated many of the same points in his meeting with the Head of Commission IV on Agriculture, Muhammad Romahurmuziy (United Development Party, PPP) and Vice Deputies Herman Khaeron (Democrat Party, PD) and Anna Mu'awanah (National Awakening Party, PKB): Australia wanted to put in place a supply chain that ensured the long term viability of the live cattle trade ... Romahurmuziy [the Head of Commission IV] said although the ban had surprised the Parliament, many of the members of Parliament with farming interests had expressed their happiness at the suspension of the trade. The suspension of the trade had driven up beef prices, which profited the farmers, and assisted Indonesia in its goal to only have ten per cent of beef supply from foreign exports by 2014 (Parliament also had plans to propose a public private partnership to turn an Indonesian island into a quarantine station for all foreign cattle, which Romahurmuziy said would also assist Indonesian with its self‑sufficiency goals). Indonesia would find it difficult to return to its old supply chains (Australia) if they had found alternative suppliers in the meantime. Commission IV members also told us the Parliament was drafting regulations on the certification of slaughterhouses as only ten percent were currently certified. Trade would be suspended to those abattoirs that were not up to standards. We also heard that Parliament was discussing changing from country‑based to a zone‑based animal health regulations (which meant Indonesia could import live cattle from India).

12. Romahurmuziy made three requests to Senator Ludwig: that the export suspension be lifted without condition as a sign of the good relationship between the two countries whilst Indonesia fixed its abattoir problems (Romahurmuziy later issued a veiled threat that unless Australia accepted the resumption of trade Parliament would ban Australian live cattle in the future and move to other countries for supply, using an island as a quarantine station); that the cattle weight on import be reduced from 350 kilograms to 250 kilograms; and that Australia limit the export of its frozen meat to 30 per cent of the live cattle trade. Senator Ludwig responded that the suspension would remain until Australia had the supply chain assurance in place. He also said the 350 kilogram weight limit had already presented a challenge to the industry. The bilateral trade should be based on a free, fair and open basis, based on the competitive advantage of each country. Asked when the suspension would be lifted, Senator Ludwig said this would occur as soon as he had a supply chain assurance.

(Brett Cattle's emphasis.)

[260]

Political situation

The Jakarta MLA office has been advised by Ministry officials, sympathetic to the Australian situation, that the Indonesian Parliament is strong at present and nationalistic sentiments are driving decisions which are obtaining strong support by all voting members. These include opening the markets to other countries and emphasising that the decision by the Australian Government will cause all the problems to the Indonesian Government's two objectives of beef self sufficiency and keeping prices to reasonable levels.

We have also been informed that while the Ministry of Agriculture and Parliament were offended by the lack of consultation and the decision to ban trade of live cattle on the footage alone without a verification visit to Indonesia, they are "hurt" by this decision. The strong relationship between the Indonesia and Australian Governments ‑ and any thought that the relationship will pull us through ‑ should not be taken lightly, as the decision by the Australian Government has gone to the heart of Indonesia.

Minister Suswono is also unhappy about the other meetings Minister Ludwig held during his visit. Apparently, the Minister of Trade requested the Australian technical team visit her officials in the Ministry. This has created a turf war, as Minister Suswono has been directed by the President to fix the issue, and so he should be seen to be leading the matter. The DAFF technical team met with the Ministry of Trade officials yesterday. Attending were officials from the Provinces and the Commerce Council, but a notable absence were Ministry of Agriculture officials. The Ministry of Trade informed the Embassy and DAFF technical team that as of July the Ministry of Trade would be responsible for permits. This is still not yet confirmed, as we are of the understanding the Ministry of Agriculture has not yet agreed to this.

Additional information regarding the Indonesian political situation is that Minister Suswono is well aware of the difficulties the Australian Government decision to ban exports to Indonesia is now placing on Australian Government, and so they are in no hurry to resume trade. Minister Suswono is sure that in time the Australian Government will come begging as the pressure from the farming community will become too great - at which time Indonesia will have the ability to negotiate what they want.

[262]

Indonesia media outlets are still covering the consequences of Australia's suspension of live cattle exports but it is not receiving as much attention as a week ago ...

2. ... Citing Bureau data, local media reported Indonesia's domestic stock consists of 14 million cattle, 1.1 million buffaloes and around 400,000 dairy cows. But another Agriculture Ministry official has been reported on Friday 24 June saying that the country should not target self‑sufficiency until clearer data is available from a census being undertaken in June 2011.

3. Director‑General at the Ministry of Agriculture, Prabowo, was reported on Wednesday 22 June, saying that the Indonesian Government should have banned cattle imports from Australia before Australian suspended its exports because Australian cattle contained a synthetic hormone (Trenbolone Acetate) that was hazardous to human health (comment: this was based on an unpublished doctoral thesis that has not yet been made available to Prabowo). Media quoted the PhD student as supporting the veracity of the hormone test result and a government official had indicated subsequent testing was negative.

4. Indonesian parliamentarians from Commission IV for Trade have also been reported saying they would consider placing a ban on Australian live cattle if the Australian Government did not resume trade soon.

...

7. A senior figure in the Indonesian media scene, Meidyatama Suryodiningrat, Editor of the Jakarta Post, told us (Bliss) on 22 June that his assessment was that the heat had gone out of the issue. While beef was a staple commodity, it was not a political commodity, unlike, for example, rice. Indonesians were generally bemused by our obsession with animal welfare standards, and the issue had only served to underline the stark differences between Australia and Indonesia in values, levels of development and issues of public concern. The fact that a senior DAFF official and then Australia's Agriculture Minister had visited Jakarta had helped foster public perceptions that, despite the unusual decision by the Australian Government to suspend trade, we were working together to find a solution.

(Brett Cattle's emphasis.)

[275]

This cable covers a range of developments on 1 July. A separate cable covers HOM's meeting with Agriculture Minister Suswono, conducted in the sidelines of a meeting with members of the Indonesian Chamber of Commerce and Industry (KADIN) and the Indonesian Employer's Association (APINDO).

Australian Government engagement in the week commencing 4 July

2. Significant high level Government to Government engagement on the live cattle issue is planned for the week commencing 4 July. The key will be Mr Rudd's visit on 8 July, which will enable meetings with key Ministers and decision makers. Planning for this visit continues. Embassy is also arranging the requested phone calls between relevant Australian and Indonesian ministers for that week.

3. The visit by DAFF Deputy Secretary Paul Morris on 3‑6 July should enable close engagement with relevant Indonesian officials on standards and verification procedures.

...

Indonesian Government perspectives

7. The planned meeting between Coordinating Minister for the Economy, Hatta Rajasa, Trade Minister Mari Pangestu and Agriculture Minister Suswono to discuss Australia's live cattle suspension is yet to occur ‑ we will continue to seek information as to when it might be held.

8. In further confirmation of [redacted] concerns about the decision to suspend the trade. [Redacted] told us (Griffiths) that [redacted] could not understand why the cattle issue had been elevated to the national level. It was an issue confined to a limited number of abattoirs. To apply a total ban broadened the problem and showed a lack of trust in Indonesia. [redacted] saw it as a slap in the face ([redacted]). [Redacted] said the problem would likely be solved during Ramadan when demand increased. Australia should position itself accordingly.

9. According to contacts, the Agriculture Minister and Ministry remain upset by the ban. Ade Tunis, advisor on international relations in plant quarantine, Ministry of Agriculture, told us (Wallner) there was a high level of displeasure within the Ministry of Agriculture over the sudden suspension of the live animal trade and subsequent perceived mishandling of the issue. The Directors General all took the view that Australia was dictating terms and there was a feeling Indonesia's sovereignty was being infringed. Minister Suswono had adopted a defiant attitude: Australia had closed the trade, it was up to them to open it again (comment: however see parallel reporting on HOM meeting with Suswono).

(Brett Cattle's emphasis.)

[277]

On 1 July, at the invitation of the Indonesian Chamber of Commerce (KADIN), HOM briefed KADIN members, the Indonesian Employer's Association (APINDO), and other key industry associations about Australia's perspective on the suspension of the live cattle trade (reftel JA59938H refers). The Indonesian Minister for Agriculture, Suswono, was also invited to provide a briefing to industry on his perspective. The session was attended by approximately 60 representatives from key industry associations and media. HOM met privately with key players, including Minister Suswono; Chairman of the Indonesian Chamber of Commerce and Industry, Suryo Sulisto; Chairman of the Indonesian Employer's Association, Sofian Wanandi; Juan Permata Adoe, Head of Farm Agribusiness Committee for KADIN (and CEO of PT Bina Mentari Tunggal, a large Indonesian feedlot); and Micky Hehuwat (KADIN's Australian liaison). Embassy was also represented by Senior Trade Commissioner Doody and Second Secretary (Economic) Eadie.

2. During the briefing session, Minister Suswono said Indonesia was willing to move quickly to resume the live cattle trade. He placed strong emphasis on the work of a joint Australian‑Indonesian expert team to agree to a set of minimum standards ... Suswono said he was yet to receive a report from the expert team, but once he had received a list of abattoirs that met the agreed standards, trade could start. He also said that following agreement on minimum standards it would be up to Australia to resume the trade. He was not standing in the way of a resumption of the trade.

3. During the briefing session, HOM said Australia was keen to resume the trade as soon as possible with facilities that met the agreed standards set by the joint Australia‑Indonesia expert team ...

4. Industry representatives were supportive and were proactively working to improve standards to comply with OIE standards ... All industry representatives urged Suswono to move to allow some trade to re‑start before Ramadan. Suswono acknowledged the need to take some action to minimise price speculation.

5. In the private meetings held either side of the briefing session, Minister Suswono said he was willing to work with Australia to resume the live cattle trade (and that he had relayed this during Minister Ludwig's visit). Apart from some comments made in jest about the sudden nature of Australia's decision to suspend the trade, he seemed more positively disposed to finding a way to move forward. Wanandi pressed Suswono on the need to establish a timetable for progress. In response, Suswono said it was now up to the work of the expert team to develop minimum standards but that Indonesia was willing to move quickly. HOM reiterated that Australian industry was willing to work closely with the Indonesian Government and private sector to help small and medium companies reach the required standard. We said Australia was very much aware that Minister Suswono wanted small and medium companies to benefit quickly from the resumption of the trade, not only the bigger companies. Suswono said it was important to support small and medium companies. Separately, Wanandi and Adoe confirmed their understanding that Minister Suswono had essentially agreed to resume the trade through a smaller number of operators that met key standards. Most of those attending interpreted Suswono's comments to mean he was not going to insist on some 25 or so companies being involved in the resumption of the trade. Sulisto advised us (HOM) that he had to push Suswono to agree to attend the session and Sulisto said it would be important to keep engaged with Suswono although he (Suswono) would find it hard to completely reneg on an undertaking given to the public.

Comment:

6. Suswono's participation at the session, his conciliatory tone and willingness to engage industry on its concerns about inflation over Ramadan is a significant development ...

7. This is an important development but we need to respond cautiously.

(Emphasis added.)

[279]

On 5 July HOM spoke to Mahendra Siregar, Vice Minister for Trade, who advised that, further to a meeting between Trade Minister Mari Pangestu, Coordinating Minister for Economic Affairs, Hatta Rajasa, and Agriculture Minister Suswono on the evening on the evening of 4 July, Indonesia planned to proceed in issuing regulations covering standards for the import to Indonesia of live animals (Siregar suggested the regulations would not be specifically for live cattle). Siregar said he hoped the text of the regulations could be finalised in the next day or two, but this timing was not certain. The regulations were to be fully enforced by the beginning of 2012 and a trial period would commence from October this year ...

3. We said Australia was ready to lift the suspension on live cattle exports quickly given Indonesia's willingness to accept verification audits, allowing individual export companies to apply for export permits ...

6. Maulida said it had been decided at the meeting of Ministers on the evening of 4 July that import licences should be issued very soon, though the timing was not yet fixed. Permits would not specify a country. The Minister for Agriculture needed to carefully calculate Indonesia's beef needs in order to decide on quota for live cattle. Indonesia had sufficient supply up until Ramadan, but it needed to calculate carefully its post‑Ramadan needs. Indonesia had new census data which should help determine supply and demand. We said that as soon as Indonesia issued its new regulations we were ready to respond positively by announcing that we were ready to grant export permits. We understood Coordinating Minister Hatta's Rajasa's concerns about the inflation and wanted to move quickly to start trade and help avoid negative inflationary impacts or speculation on cattle in Indonesia.

7. Maulida asked about the objective of Foreign Minister Rudd's visit to Jakarta this week. We said Mr Rudd wanted to reassure Indonesia of Australia's commitment to a strong bilateral relationship that should not be negatively affected by this one issue. Mr Rudd wanted to work together with Indonesian Ministers to progress an early resumption of the trade. Australian Ministers were consulting very closely on this issue and it was the wish of the Prime Minister, the Foreign Minister, the Trade Minister and the Agriculture Minister that this matter be resolved as quickly as possible.

(Emphasis added.)

[319]

Northern Territory Minister for Primary Industries, Kon Vatskalis, visited Jakarta 18-19 September to discuss the live cattle trade. He had meetings with the Ministry of Trade (Vice Minister Mahendra Siregar and Director General Deddy Saleh) and the Ministry of Agriculture (Assistant Minister Syukur and other officials) ...

...

4. Deddy Saleh said that responsibility for issuing import permits for live cattle and boxed beef would be transferred to the Ministry of Trade from January 2012 under the new regulations. Decisions would not be left to the Ministry of Agriculture, as in the past. Allocation for next year would be discussed with the Ministry of Trade and the Coordinating Ministry for Economic Affairs. The allocation for next year would be discussed in October.

5. At the Ministry of Agriculture Vatskalis met Assistant Minister for Agricultural Investment, Syukur Iwantoro, the Director of the Animal Quarantine and Biosafety Centre from the Agricultural Ministry, Sujarwanto, and a host of other Agriculture Ministry officials. Vatskalis reiterated the strong partnership between Indonesia and Australia, particularly Northern Territory. He noted progress made since the lifting of the trade suspension. He also noted it would be important to ensure the trade continued, with Australia helping in a low‑key way in areas such as training.

6. Syukur said Indonesia had been shocked by the Australian [G]overnment's ban on live cattle exports ...

7. Syukur said Indonesia did not want to halt livestock imports despite its policy of self‑sufficiency. 10% of the market would remain open for the import of animals even once Indonesia was self‑sufficient. Indonesia's cattle census showed it had a 14.8 million strong domestic herd, which meant it was already self‑sufficient - and yet Indonesia still needed imports. This was an 'internal issue' linked to parliament's desire to stop imports. Syukur also advised that in January 2012 the Ministry of Trade would assume responsibility for issuing import permits. The Ministry of Agriculture would only make recommendations on animal welfare and quotas, with a view to self‑sufficiency.

8. Syukur said Agriculture Minister Suswono was keen to encourage cooperation with Australia and the Northern Territory in areas other than live cattle.

(Emphasis added.)

[333]

Brett Cattle placed emphasis in closing submission on a "Policy Paper", published in December 2010, by the Directorate of Food and Agriculture of the Ministry of National Development Planning/National Development Planning Agency, titled "Strategies and Policies to Accelerate the Achievement of Beef Self‑Sufficiency in 2014": CBD291.1. The Policy Paper was "prepared to provide a bridge between the [Blueprint] ... and operational strategies and policies which are focused and will serve as a leverage factor in realising meat self‑sufficiency in 2014": at 8908. It sought to "formulate breakthrough alternative policies" which were "hoped to accelerate the sufficiency of domestic meat": at 8908. These alternative policies were to "complement existing policies": at 8909. It observed that "a tendency for import volume to continue to increase" would "cause animal‑based food independence and sovereignty, especially beef, to move further from reach, and cause Indonesia to fall into the food trap of exporting countries": at 8918.
The Policy Paper observed that increased imports were "detrimental to the country's economy and society, considering that such copious feed and meat import activities are a disincentive for domestic beef cattle farming activities": CBD291.1 at 8918. It observed that "cattle breeding and farming ...[is] mostly carried out by breeders on a limited scale and with low profit margins" and that "[f]armers have to face unequal competition, including pressures due to the invasion of cheap imported beef": at 8919. The Policy Paper expressed the view that funding was "still inadequate" and that co‑ordination between agencies was still weak: at 8919. It referred to the "the seriousness of the President of the Republic of Indonesia to realise beef self‑sufficiency": at 8919. The Policy Paper examined the reasons why earlier beef self‑sufficiency programs had been unsuccessful: at 8920.
The Policy Paper noted that about 80% of meat consumers were in urban areas (CBD291.1 at 8920-21):

[348]

Diah Maulida, Deputy Minister for Agriculture and Marine at the Coordinating Ministry for Economic Affairs has confirmed that Indonesia's quota for imported live cattle next year has been set at 283,000 head. The quota for boxed beef is 34,000 tons. Last year the quota was set (also in December) at 500,000 head for live cattle and 50,000 tonnes for boxed beef. The final quota for boxed beef was revised up to 99,000 tonnes, with actual imports of 107,000 tonnes.

2. The Coordinating Ministry had earlier advised us that the live cattle quota for 2012 would ... be determined by the results of Indonesia's domestic cattle survey. According to MLA (Country Director, John Ackerman) the Ministry of Agriculture's calculations for quota are based directly on the results of the cattle survey along with projected local consumption. The projected domestic demand in the calculations does not appear to factor in demand from westerners, the tourism industry or manufacturing. MLA also advised that Indonesia's National Beef Council has questioned the results of the cattle survey published by the Indonesian Central Statistics Agency (BPS). The Council estimates that the real figure could be between 30 to 50 percent lower than the BPS statistic. The Ministry of Agriculture's high estimates are likely to be driven by a desire to appear to be meeting the self sufficiency goals in the national blueprint. Estimates from Indonesian Industry put anticipated demand for imported cattle at 500-600,000 head for live cattle and 80-100,000 tonnes for boxed beef. As in the past, it is highly likely that the quota for both live cattle and boxed beef will be revised upwards in the first half of next year.

3. It is interesting to note the Ministry of Trade and the Coordinating Ministry for Economic Affairs did not use their newly acquired authority under new regulations to increase the import quota. This conciliatory gesture towards the Ministry of Agriculture might be a result of the Trade Ministry not wishing to leave itself open to further criticism, given the scrutiny is currently under over imports across the board. But Trade will have a close eye to food prices over coming months ‑ with beef prices likely to rise quickly if supplies are insufficient.

(Emphasis added.)

[359]

Food security

The Indonesian Government is acutely aware that its food security challenges are significant and set to increase. However, the core component of its national food plan - achievement of self‑sufficiency in five staple commodities (rice, soybeans, corn, sugar and beef) by 2014 - is a short‑sighted and unrealistic policy that threatens food supply in both the short and long term. The policy is driven by economic nationalism and concern that farmers - who comprise 40 per cent of the population - will defy the government if their interests are not looked after. Prior to Australia's live cattle trade suspension, Australian officials advocated to Indonesia security of supply over self‑sufficiency. Following the suspension, Australia's messages have instead focused on the importance of trade as a method of supplementing local production to enhance food security.

Indonesian parliamentarians, including Trade Minister Gita Wirjawan, have been openly critical of trade liberalisation as part of a realistic and cost‑effective approach to food security, ie through ensuring adequate imports to supplement local food production; and instead favour protection for farmers and food self‑sufficiency. An Indonesian interlocutor told Australian officials that he believed the self‑sufficiency policy was based on politics rather than fact, but under current political circumstances and the particular power plays in the parliament, the policy would persist.

This self‑sufficiency policy is driving many trade irritants, including regulations to restrict access for horticultural products to certain ports, and could be further enshrined in a Draft Food Law. The law would formalise policy principles on food security and trade, stipulating that food could only be imported if there was a domestic shortage which could not be met by domestic production, and food could only be exported if domestic consumption and food reserve requirements were met first.

Australia does not support self‑sufficiency as a viable means of achieving food security and sees reform of markets and trade as an essential part of improving global food security. While domestic agricultural production will continue to form a significant part of most countries' food supplies, food self‑sufficiency is neither practical nor economically advantageous, nor without risks. Even efficient and surplus producers can suffer from droughts, disease outbreaks, crop failures and natural disasters.

[361]

Import permit restrictions

In support of its objectives to achieve self‑sufficiency in beef by 2014, Indonesia has set the level of imports for live cattle in 2012 at 283,000 head, a significant reduction on the 2011 quota of 500,000 head.

Indonesian media reports suggest that permits for the first quarter of 2012 were set at 60 000 head. According to DAFF export statistics, between 1 January and 9 March 2012, 59,525 head of cattle were exported to Indonesia. Indonesian Ministry of Trade officials have informally told us the quota for permits in the second quarter of 2012 will be 125,000 head. Although the combined first and second quarter permits amount to 65 per cent of annual permits, this does not increase the annual quota of 283,000 head. This second quarter figure has also been advised to business associations and reported in the Indonesian media.

Indonesia has determined the level of imports for 2012 based on Government projections of domestic supply and demand. It is highly likely that - as in previous years - relevant Indonesian agencies will revise import permits higher in light of domestic price and supply considerations. While this would be a positive for Australian producers, the uncertainty surrounding the process for import permits imposes a significant constraint on Australian producers' ability to plan for their supply to the Indonesian market. You should emphasise to your Indonesian counterparts that these ongoing uncertainties will force Australian producers to look at building new markets elsewhere, and could leave Indonesian consumers significantly worse off.

Alongside the import restrictions on live cattle, Indonesia has also imposed a lower quota on boxed beef imports, set at 34,000 tonnes for 2012. Actual imports of boxed beef in 2011 were 107,000 tonnes. We have not received any advice from Indonesian agencies on quarterly quotas.

Indonesian media has reported on anecdotal price rises for beef, with local feedlotters pointing to the trade restrictions impacting on supply. This may be the first indication that - as expected - prices would rise and the Indonesian Government would have to revise its import permit quotas considerably higher.

Proposed 250kg weight limit on live cattle imports

Indonesia's Parliamentary Commission IV (Agriculture) has proposed to Government the introduction of a 250kg weight limit for imported live cattle. The enforcement of the current 350kg weight limit by Indonesian authorities in the past two years has had a significant negative impact on exports of live cattle from northern Australia. The proposal to further restrict imports will make the trade uneconomic for Australian exporters.

[369]

The first sentence emphasised by Brett Cattle above is one of very few references in the contemporaneous documents which record the view of some industry participants that the lower quotas were in part a "reprisal". Whilst it may be that particular industry representatives considered that decreasing imports was in part a "reprisal" on the part of the Ministry of Agriculture, it is unlikely that decisions (ultimately made by the Coordinating Ministry from January 2012, after consultation) were made on that basis. In any event, Brett Cattle expressly did not advance the case that the quotas for the 2012 and 2013 years were by way of retaliation or retribution: T713.37-40.
As to the second sentence, it is clear that the Ministry of Agriculture advocated for implementing the 2014 BSSP and, if anything, favoured the interests of farmers which it perceived to lie with keeping beef prices high. As has been mentioned, Minister Suswono's political interests lay with assisting farmers and the Ministry of Agriculture's 2010 Strategic Plan involved increasing the income of farmers and the Farmer Terms of Trade. The Ministry of Agriculture had been charged with increasing farmer welfare. Many of its activities, such as "continu[ing] to fight for the provision of interest subsidies for farmers and livestock farmers" (CBD412.1 at 20678), were directed to achieving that objective.
DFAT Cable JA61009H, sent on 12 April 2012, recorded that continued consideration was being given to increasing the quota for 2012 and that the "Ministry of Agriculture had remained adamant that supply was sufficient, despite the growing lobbying and criticism from Indonesian importers and feedlotters": CBD357 at 9693 [3].
DFAT Cable JA61043H, sent on 20 April 2012, referred to a recent meeting between the Ministry of Agriculture and non‑farmer industry participants, during which the Ministry maintained the view that there was enough domestic supply to meet demand: CBD1018 at 38805. The cable referred to the establishment of a team to map domestic sources of supply and demand. The cable included (at 38805-6):

[384]

2. The Ministry of Agriculture (MoA) seems to be stubbornly holding the line and insisting that second half year quotas for live cattle and boxed beef will be 98,000 head and 8,300 tonnes respectively. These volumes are significantly lower than the first half year when 185,000 head of live cattle was issued as import permits (of which approximately 90 per cent will be realised as imports by 30 June) and a total of 25,700 tonnes of boxed beef. This seems to fly in the fact of all price signals coming from the market and representations from a number of industry bodies. It is also at odds with views from both the Ministry of Trade (MoT) and the Coordinating Ministry for the Economy, who are looking for evidence to support the MoA assertion that domestic sources can meet the peak demand period ahead over Ramadan.

3. Deddy Saleh, Director General of Foreign Trade, MOT told us (Charge d'Affaires, DFAT Dunstone and DAFF Wallner) on 21 June that he thought the MoA position was "irrational" and pointed to his ministry's market monitoring of prices which showed that, while prices for beef were not volatile, they were already above peak Ramadan prices reached last year. Accordingly, the MoT was proposing an incremental approach to increasing quota for the second half of the year where all residual quota was issued immediately, and periodic reviews determined the need for additional quota allocations later in the year. Saleh also said the supply potential forecast by the MoA's census (14 million head of cattle) was probably right based upon the numbers of cattle estimated to be in Indonesia (making the assumption that the seven million farmers in Indonesia had, on average, two cattle each). He said, however, that smallholder farmers were not motivated to sell on price because they kept cattle as a savings mechanism, and sent animals to slaughter based upon social drivers such as a daughter's wedding.

...

6. Sembiring said that beef had become intensely politicised and was now the flagship product for Suswono's claim that progress had been made towards food self‑sufficiency. Sembiring said that, of the five key food commodities identified in the self‑sufficiency blueprint, only beef showed any evidence that production had increased (he was referring to last year's cattle census). Hence, Suswono was reluctant to increase quotas, which would contradict the claim that Indonesia had already reached a domestic herd size needed for self‑sufficiency.

[402]

Definitive numbers for 2013 quota levels for boxed beef and live cattle are not yet available. These are set by means of a negotiation process between the Ministries of Trade, Agriculture and Coordination for Economic Affairs, taking account of demand, domestic supply and the blueprint for beef self sufficiency program 2014. This is a relatively new process having been implemented in December last year for this year's quota allocation. At least three coordination meetings were held to reach consensus on agreed quota levels for 2012. The first coordination meeting to consider 2013 quotas has been flagged but not yet convened.

[The cable reported on statements made by Syukur Iwantoro, Director General of Livestock and Animal Health Services.]

4. There are two points to note in relation to Iwantoro's statement. According to the Ministry of Agriculture:

- Estimated consumption has risen from 484,000 t in 2012 to a predicted 535,000 t next year based upon a per capita rise in beef consumption from 1.9 kilograms per capita to 2.2 kilograms per capita.

- Estimated supply from domestic sources has also increased, reducing the supply gap from 17 percent of national demand to 14 percent.

Comments:

5. There is little rigor to Ministry of Agriculture estimates as market price indicators continue to show sustained high prices, reflecting a very undersupplied market which is likely to be damping of beef consumption as consumers opt for lower priced alternative protein sources. The estimates represent a balancing act of pursing the blueprint to self‑sufficiency on one hand and the reality of what MLA now says is one of the most expensive beef markets in the world.

6. Iwantoro's public comments represent the Ministry of Agriculture's negotiating position going into the first coordination meeting. Experience suggests that while Trade and Coordinating Ministries are likely to be more sensitive to price pressures and may seek to set higher levels of imports, the Ministry of Agriculture will hold firmly to their position backed by technical supply / demand data and the President's self‑sufficiency blueprint. The Ministry of Agriculture position has prevailed to date.

7. We will follow up with relevant Ministries to try to confirm estimated quota levels for 2013. We will also make representations again to the Ministry of Trade seeking them to honour their commitment of last year to issue import permits a month in advance.

[412]

Beef Shortage ‑ Indonesian Government Response

5. Indonesian Government ministers are increasingly concerned at the rising cost of beef and the potential effect on inflation. Only Agriculture Minister Suswono is still arguing against more imports, stating the need for self‑sufficiency. Suswono's priority is protection of the farmers' short‑term interests, in line with the politics of the PKS party, which has a disproportionate influence over agriculture policy in Indonesia. For Suswono, high beef prices for Indonesian middle‑class consumers is a positive development because it means more profits for his constituents.

6. Iman Pambagyo, Director General for International Cooperation at the Ministry of Trade (please protect) told us (Lawson) that Gita Wirjawan and Hatta Rajasa were very worried about the rising beef price and had been using media and other outlets to put pressure on Minister Suswono to increase the quota. But Suswono was not concerned about rising prices, only about protecting domestic producers. He listened only to the PKS party and their lobbyists in the Indonesian Parliament. We are reliably informed that Gita Witjawan has said himself that he fully appreciates that there is a scarcity of beef in Indonesia and that imports should be increased, but he is not prepared to take Minister Suswono on directly over the quota issue.

7. On Monday 26 November we (Lawson) met Edy Prio Pambudi, Deputy Coordinator for Macroeconomy and Finance at the Coordinating Ministry for Economic Affairs (also Lecturer at the University of Indonesia and adviser to Coordinating Minister Hatta Rajasa). Among other issues, we discussed the problems surrounding the shonage of beef and advised Pambudi about the difficulties surrounding the boxed beef detained at the port of Tanjung Priok. Pambudi told us on 28 November that he had spoken with Minister Rajasa and a range of others, including Customs. He said port authority charges would now be waived ...

8. We met Pambudi again, at his request, on Sunday 2 December ... He said on the question of quota that discussions were ongoing between Ministers as to whether to import more beef for December, and whether to increase the quota for next year. Hatta Rajasa was very worried about the potential impact of beef prices on inflation. Pambudi had organised for price data to be collected from all regional areas to help Hatta make a strong case about the impact of the beef shortage. A decision would be made soon on whether additional quota should be granted to ease the shortage, but the argument for an increase needed to be compelling, given the sensitive politics of self‑sufficiency.

(Brett Cattle's emphasis.)

[422]

On 5 December Embassy (Lawson) met with Ery Novrizal Yunas, Deputy Director Imports, Ministry of Trade to discuss the 2013 beef quota and confirm the status of government discussions on the final quota.

2. Yunas confirmed initial figures for the 2013 quota had been agreed at 80,000 tonnes, with a breakdown of 267,000 head of cattle (representing 48,000 tonnes of beef through a calculation of 180 kg per head of cattle) and 32,000 tonnes of boxed beef ... However Yunas told us these figures were still subject to discussion, with Trade Minister Wirjawan and Coordinating Minister for Economic Affairs Hatta Rajasa meeting that afternoon (5 December) to discuss possible revisions. This was confirmed in separate discussions on 5 December by Maudy Kiranayanti, Deputy Director Australia desk, Ministry of Trade, who told us (Lawson) that discussions on import quota allocation were ongoing.

3. Yunas noted he had been inundated with complaints by importers and other interested parties following the initial announcement of the 2013 quota ... In Yunas' opinion, 80,000 tonnes was not enough to satisfy domestic demand, and he "hoped" that Wirjawan and Rajasa would agree to raise the quota. However he acknowledged the politics of such an increase would be very difficult, particularly in the lead‑up to the 2014 elections and in the context of Indonesia's self‑sufficiency drive. Yunas noted quotas set for horticulture were also creating problems in the market, compared to staples such as sugar and rice where quota was adequate.

...

6. Edy Prio Pambudi, Deputy Coordinator for Macroeconomy and Finance, Coordinating Ministry for Economic Affairs told us on 5 December that the data collected from the regions demonstrated that beef prices would contribute to 5 percent of inflation, which was significant. This was the reason action was required to address the shortage. He said that a final decision on quota for 2013 would not be reached until the end of next week, based on a recalculation of national demand.

7. Kiranayanti, Australia desk told us the Ministry of Trade was well aware of the shortage of beef, but said the difficulty lay in finding a diplomatic way of selling the message to the Indonesian people (ie farmers) that imports were needed. She said Vice Minister for Trade Bayu Krisnamurthi had told her that Indonesia needed to do three things to manage the beef shortage: 1. increase imports for processed meats, such as that used in meatballs (bakso); 2. work harder in genetics through the import of cattle semen; and 3. raise investment levels particularly in integrated slaughterhouses.

(Emphasis added; original bolding.)

[446]

8. Maulida said Coordinating Minister for the Economy, Hatta Rajasa, was very keen to import fattened cattle from Australia direct for slaughter to meet immediate demand in the lead‑up to Ramadan. However, Agriculture Minister Suswono was arguing against this. Maulida further noted that Suswono could sometimes listen to reason, but that Director General for Livestock Services (DGLS) Syukur Iwantoro, was equally if not more difficult to convince. Maulida asked whether cattle for direct slaughter would need to go through the normal supply chain and feedlot systems. We said they would need to go through supply chains complying with ESCAS. We noted that the price of cattle in Australia was currently very reasonable and offered to provide additional information to assist if necessary.

9. Maulida said the Indonesian [G]overnment had set aside 1 trillion Rupiah to facilitate cattle breeding projects. 800 billion had been given to DGLS to administer and 200 billion to the Ministry of Public Works. The idea was to buy land and offer it to investors. Indonesia businessman Indra Hassan was closely involved in current plans for cattle ranches in two locations in Nusa Tengara Timur (NTT) including Sumba. Kadin were to hold a meeting in NTT on 27 June in relation to the investment plans.

10. Maulida said the Goverment was already calculating how much more quota for live cattle and boxed beef would be needed for the rest of the year. She said a new cattle census had been undertaken which set the numbers far lower than they had been. Agriculture Ministry officials attending a seminar in Yogyakarta at which we (O'Brien) gave a presentation on food security also advised that a new census had been conducted and that it put Indonesia's domestic herd at 12.5 million, down from 14 million in 2011. The census had been released by another agency might be made public in August. All Agriculture Ministry staff around the table said this was good news for Australia but agreed it would not be welcomed by Minister Suswono, because it would indicate that more imports were needed.

[464]

The first contention was that_,_ before the Second Control Order, the annual number of imports of live cattle had for many years been gradually increasing and, for each of 2007, 2008, 2009 and 2010, had numbered over 500,000, head of cattle per year: ACS[57].
That proposition may be accepted, noting that it excludes the 2003 and 2004 years when cattle exports were decreasing. If one includes 2003 and 2004, the exports were as follows (CBG38; CBD478; SOAF 2 at [20]-[23], [25], [30]):
- In 2003: a total of 375,830
- In 2004: a total of 357,060
- In 2005: a total of 347,267
- In 2006: a total of 384,965
- In 2007: a total of 503,536
- In 2008: a total of 640,435
- In 2009: a total of 751,143
- In 2010: a total of 514,935
Brett Cattle submitted that the Court should find that the "reduction in the number of imports in 2010 was due to a realignment, in an otherwise consistent trend of increasing imports, which was caused by the Indonesian Government's introduction of a 350kg weight limit on imported cattle": ACS[57(c)].
The reduction in numbers was a result of Indonesia's adoption and implementation of the 2014 BSSP. In implementing that beef self‑sufficiency program, Indonesia began reducing numbers of imports from January 2010. From about March 2010, Indonesia began enforcing an existing regulation (Regulation 7 of 2008) which restricted cattle imports to cattle of a maximum weight of 350kg: CBD162 at 3452; CBD166 at 3469. The enforcement of existing regulations (and the introduction of new regulations) was a part of Indonesia's beef self‑sufficiency strategy, envisaged in the Blueprint, the Guide and the 2010 Strategic Plan.
The total number of cattle reduced by 31.4% between 2009 and 2010. Apart from an observation made by Mr Pankhurst, the evidence does not suggest that the reduction in numbers was "due to a realignment ... which was caused by the Indonesian [G]overnment's introduction of a 350kg weight limit": ACS[57(c)] (emphasis added). Rather, the number of cattle was reduced because the 2014 BSSP contemplated reducing the numbers of imports and enforcing existing regulations, which included weight limits.
The weight restriction was deliberately enforced to add value in Indonesia by feeding cattle for between 90 to 120 days in Indonesian feedlots where they would be slaughtered at between 400kg to 500kg and possibly more: CBD155 at 3241 (400-450kg); T111.37-47 (Mr Pankhurst, 500kg); CBD780 at 34199 (400kg); CBD250 at 5878 (average of 480kg). Adding value in Indonesia was an important aspect of the beef self‑sufficiency strategy which would increase income for farmers - see, for example: CBD410.1 at 17340, 17368 ("[f]attening will provide added value and create jobs" in businesses seen to be competitive because the cost of feed was relatively low), 17375; ACS[57(c)(ii)]; T219.30-45 (Dr Krisnamurthi).
Mr Pankhurst gave evidence that he understood there was a reduction in the number of imports in 2010 because the Indonesian Government considered that "importing less numbers of cattle and value‑adding those cattle more in Indonesia would produce the same or more of the amount of meat that they needed which would have originally come from more cattle": T126.18-38. It may be accepted that there is a relationship between the number of cattle and the weight restriction, particularly in terms of determining what was needed to satisfy demand. However, the evidence as a whole does not lead to the conclusion that the reduction in numbers was caused by the enforcement of the weight restriction, as opposed to being an independent component of the strategy to increase Indonesia's domestic contribution to its consumption needs through various measures which included a reduction in numbers and enforcement of weight restrictions.
The Australian industry estimated that between 20 to 30% of imports in 2010 had been between 400 and 450kg (being what industry considered to be slaughter ready): CBD155 at 3241. If this fact is also considered in calculating how much beef was imported, then the reduction from 2009 to 2010 must be materially greater than 31.4%, because 31.4% only reflects the reduction in numbers and not the average weight reduction in 2010 compared to 2009.

[473]

The 2010 Policy Paper was published almost a year after the Blueprint, Guide and 2010 Strategic Plan. It was intended to provide additional measures which might "complement" the existing 2014 BSSP: CBD410.1 at 17369. It was not a revision of the Blueprint and did not suggest that the strategies being implemented should be abandoned. It identified various threats, including the "influence of foreign cattle markets (exporting countries) on local cattle markets" and the "prices of imported feeder and beef are cheaper than local beef": CBD291.1 at 8948. It suggested "[i]mplementation of market policies by protecting local cattle prices, controlling imports of cattle and meat and interest rates": at 8949.
The 2010 Policy Paper also stated that "beef consumers are from the upper middle class who are not affected by price changes": CBD291.1 at 8927. It noted that "[t]here is only one variable that influences the price of local beef, namely the increase in the price of imported beef": at 8928. Whilst it is true that the cost of beef to consumers was a consideration, it was recognised in the Policy Paper that 80% of consumers were from urban areas and that the "policy of restricting prices (through ceiling prices) will not be effective, because it will only be enjoyed by the rich": at 8927. This was "not in line with the government's efforts to increase the general public's consumption of animal protein": at 8928. On the other hand, higher beef prices (at an inevitable cost to mostly urban consumers) improved the incomes for small scale farmers, thereby transferring wealth from urban areas to rural areas in accordance with Indonesia's broader policy objectives. The Blueprint and 2010 Strategic plan made clear that one of the principal objectives of the 2014 BSSP was the improvement of farmer welfare and an increase in farmer income.
None of that is to deny that imports of live cattle were necessary both to meet consumption needs (feeders) and to achieve a desired increase in Indonesia's cattle population (breeders): T219.24-8. Consistently with the documentary evidence, Dr Krisnamurthi explained at T220.4-10:

[481]

It might be observed in relation to this evidence that imports of non‑live cattle (boxed beef) had also been significantly reduced, contrary to what Dr Krisnamurthi implied in this evidence and stated elsewhere: T225.31-40.
There was never a policy of maintaining the number of imports or that the number to be maintained was 500,000 in any of the years 2010 to 2013. Such a policy is not to be found in any contemporaneous document, and it is inconsistent with what occurred before the Second Control Order. The number of imports was immediately reduced once the Blueprint was published in January 2010. The reduction in imports was later followed by the enforcement of weight restrictions from March 2010: CBD162 at 3452; CBD166 at 3469. This was followed on 28 July 2010 with identification of a total number of imports for 2010 of 452,000: CBD553 at 32704. Quotas for 2011 and 2012 were set having regard to a variety of considerations, including cattle numbers, maintaining a sufficiently high price for beef and forecasted domestic supply and consumption. If there was a policy to maintain import numbers at a specific level from 2010, or at 500,000, it would have been articulated in the contemporaneous documents and such an unusual policy would have been referred to and explained. The contemporaneous documents contained numerous references to statements made by Dr Krisnamurthi and others during the relevant period and there was no mention of Indonesia having a policy of maintaining imports at 500,000. Dr Krisnamurthi's evidence in this respect was contradicted by his evidence that the design of the program was for a fall in feeder cattle and boxed beef, and an increase in domestic production, with total imports reducing in each of 2011, 2012, 2103 and 2014: T257.45-258.11. Dr Krisnamurthi's evidence is also contradicted by the Blueprint, the Guide, the 2010 Strategic Plan and the 2010 Policy Document.
Brett Cattle submitted that "before the Second Control Order, the Indonesian [G]overnment's pursuit of self‑sufficiency was not planned to involve any reduction or restriction of import quotas (at least in the short term), but rather quotas were expected to be maintained at the level of around 500,000 head of cattle per year, and the increasing demand for beef in Indonesia was hoped to be met through increased production from the domestic herd": ACS[61(e)].
That submission is not supported by any contemporaneous documentary evidence, is contradicted by much contemporaneous documentary evidence and the events, and must be rejected.
It should also be noted that Brett Cattle's contention that imports of 500,000 were needed to satisfy demand and keep prices stable and affordable was not made out.

[488]

(a) One of the steps taken by the Indonesian Government to decrease its reliance on Australian live cattle was to significantly reduce the quota for live cattle imports in both 2012 and 2013 (as compared with previous years), and to enforce the quotas strictly: ACS[68].

(b) The Second Control Order was a material or contributing cause of the Indonesian Government's decision to put in place the import quota for 2012 at the level it did because of the uncertainty that it had created regarding whether Australia would be a reliable source of beef imports for Indonesia in the future: ACS[68(c)].

(c) The Indonesian Government enforced the quota for 2012 strictly, as the number of imports in 2012 (i.e. 276,295 head of cattle) was lower than the annual quota for 2012 (i.e. 283,000 head of cattle), which demonstrates that the Indonesian Government was unwilling to release additional import permits beyond the total quota amount. This marked a change in the Indonesian Government's approach, as in 2010 the Indonesian Government had announced that it would only issue 452,000 import permits, but by the end of 2010 there had been a total of 514,935 head of live cattle imported: ACS[68(d)].

(d) For 2013, as with 2012, the Indonesian Government maintained the levels of the import quota at historically low levels, because (in part) of the Indonesian Government's belief that it was necessary to reduce reliance on imports of live cattle from Australia, due to the uncertainty in the reliability of that source of beef that had been generated by the making of the Second Control Order: ACS[68(e)].

(e) Further, in deciding to set the import quotas for 2012 and 2013 that it did, the Indonesian Government was not merely pursuing its existing self‑sufficiency policy (as set out in the Blueprint and 2010 Strategic Plan), but rather - because of the uncertainty as to whether Australia could be considered a reliable source of beef for Indonesia in the future - the Indonesian Government decided to accelerate efforts to achieve self‑sufficiency in beef: ACS[69].

[490]

In January 2010, the Indonesian Government implemented its third attempt at beef self‑sufficiency. The 2014 BSSP was developed after examining the reasons for earlier failures and was carefully planned, widely promoted and well‑funded. The President had made a political commitment to the 2014 BSSP. It was implemented by a number of Indonesian Ministries, led by the Ministry of Agriculture, and at all levels of government, with an operational structure from the "Central Level", "Provincial Level", "Regency/City Level" and "Sub‑District Level", which contemplated a "Technical Task Force in each sub‑district area": CBD410.1 at 17445-50.
From the outset, the program included at least the following:
- substantial State backed resources to support farmers and encourage domestic farming;
- restricting imports, including by the use of tariff and non‑tariff barriers;
- enforcing existing regulations and developing new regulations to restrict imports;
- maintaining beef prices at a level sufficient to achieve the desired increase in the incomes and welfare of farmers, and the desired increased in the Farners Terms of Trade, including by restricting imports, whilst also seeking to ensure that beef prices remained affordable to consumers and stable.
In preparing the Blueprint, it was recognised as essential - a "pre‑requisite for success" - that a detailed census be carried out: CBD410.1 at 17457. A census was required to determine whether the 2014 BSSP, as it stood when introduced, required modification and to accurately forecast Indonesia's capacity to supply beef from domestic sources: at 17457. When introduced, the Blueprint assumed that Indonesia had 12.61 million cattle: at 17401. It planned to achieve a beef self‑sufficiency ratio of 70.2% in 2010; 75.5% in 2011; 80.5% in 2012, 85.3% in 2013 and 90% in 2014: at 17357.
From January 2010, Indonesia seriously pursued beef self‑sufficiency by seeking to increase domestic production and decrease imports of live cattle both by number and by weight. Live cattle exports reduced from 751,143 in 2009 to 514,935 in 2010: SOAF 2 at [25], [30]. The full picture is not provided by the difference between those two numbers, because it is likely that significantly more slaughter cattle were exported in 2009 than in the first two months of 2010.
About 20 to 30% of the cattle exported in 2009 were slaughter cattle: CBD166 at 3474. The 350kg weight restriction began to be strictly enforced in March 2010: CBD162 at 3452; CBD166 at 3469. In January and February 2010, exports totalled 94,930: CBG38. It is unlikely that the percentage of these that were slaughter ready was greater than the 20 to 30% ratio which had existed in 2009. Accordingly, the decline between 2009 and 2010 in terms of weight is likely to be materially larger than the 31.4% decline in numbers.
On 28 July 2010, the DGLS stated that the total import permits to be issued for the 2010 year would be 452,000: CBD553 at 32704. Ultimately, 514,935 live cattle were imported: SOAF 2 at [30]. Australian industry was seriously affected by Indonesia's pursuit of its self‑sufficiency policy in 2010, to the point that the issue was seen as "critical" and was raised with the Australian Government and the Australian Government was pursuing the issue with Indonesian officials: CBD556 at 32709; CBD559.
In late 2010, the quota for 2011 was set at 500,000: SOAF 2 at [32]. Ultimately, 412,057 live cattle were exported: SOAF 2 at [42]. Rares J held that an additional 88,000 would have been exported in 2011 were it not for the Second Control Order, with the result that around 500,000 cattle in total would have been exported in 2010: LJ[462].
There had already been a 31.4% decline in total live cattle exports in 2010 compared to 2009. From 1 January 2011 to 31 May 2011, exports to Indonesia totalled 203,505 cattle. In the same period in 2010, exports totalled 249,166, representing a further decline of 18.3% compared to the same five months of 2010: SOAF 2 at [28]; CBG38. The total decline between 2009 and 2010, and the further decline in the first five months of 2011 compared to the same period in 2010, were consistent with Indonesia's pursuit of its 2014 BSSP. The low number of exports in the first five months of 2011 was necessarily unaffected by the Second Control Order which had not yet occurred. If exports had continued throughout 2011 at the same average rate as the first five months of 2011, exports would have totalled 488,412.

[493]

The facts do not provide a serious basis for concluding that exports would have begun to increase were it not for the Second Control Order. To the contrary, it is more likely that Indonesia would have continued to reduce its imports of cattle (and boxed beef). First (and of itself sufficient), the Indonesian Government would have continued to pursue its 2014 BSSP. The President had made a public commitment to the policy. It was being pursued with vigour. It was organised and funded. Domestic production was increasing. It was in the interests of Indonesia's large farming population. And it would have been politically impossible to bring the program to an end or not continue to pursue it as it had been pursued. The evidence indicated that Indonesian farmers reacted negatively to increased imports and particularly to price decreases caused by increased imports.
Secondly, it was not established that increased demand required an increase in live cattle imports in 2011 or 2012. Indonesia's production share of consumption (its beef self‑sufficiency ratio) rose from about 53.1% in 2010, to 70.8% in 2011, to 76.8% in 2012 and to 77.3% in 2013: CBD234; Smith 1 at Table 5.2. It was central to the 2014 BSSP that domestic production increase and imports decrease. This is what occurred in 2010 after the 2014 BSSP was introduced in January 2010: CBD234.
Whilst monthly data is not available for domestic production, it is extremely likely that this is also what occurred in the first five months of 2011 before the Second Control Order was made.
Both of Mr Smith's alternatives assume that, in the absence of the Second Control Order, Indonesia's beef self‑sufficiency ratio would have been less than that in fact achieved. This assumption is central to his conclusions. I do not accept that these assumptions reflect what would have occurred in the Exceptions Order Scenario. The increase in Indonesia' beef self‑sufficiency ratio in 2010 and 2011 was a result of deliberate government intervention directed at increasing that ratio in the pursuit of food security and the objective of increasing farmer income and welfare. Whilst price stability was desired and prices needed to be affordable for urban and other consumers, it was a "fundamental" component of the strategy that beef prices be kept at a level sufficient to meet the objective of increasing farmer income: CBD412.1 at 20690. The strategy was designed to increase the welfare of Indonesia's large, and comparatively poor, rural farming population. One method of maintaining sufficiently high beef prices was to restrict imports.
The President had made a political commitment to the beef self‑sufficiency program and charged Minister Suswono with achieving that self‑sufficiency, improving farmer welfare and modernising Indonesia's agricultural sector. Whilst the Ministry of Agriculture took the lead role in 2010, it was to obtain assistance, including financial assistance, from many other Ministries (CBD410.1 at 17393) and the program involved all levels of government. The 2014 BSSP was vigorously pursued over the course of 2010 and in the first five months of 2011. As at 7 June 2011, the 2014 BSSP was going to continue to be pursued.
It should be noted that Mr Smith's assumptions about how Indonesia would have pursued its beef self‑sufficiency program if the Second Control Order had not been made involved assuming that an Exceptions Order "would have resulted in the same number of live cattle exports as a scenario in which there was no disruption": Joint Report [16]; T595.23-7. That is, Mr Smith assumed that an Exceptions Order would have had no effect on cattle exports, which (on his calculations) would have started to increase. That proposition cannot be accepted given that the Exceptions Order would have involved "a general prohibition of any exports of live cattle to Indonesia, but subject to [a] power to grant exceptions": LJ[405].
The Second Control Order was made on 7 June 2011. The special cattle census was being carried out at this time. The preliminary results of the census were known by at least 4 July 2011 and indicated that there were 14.43 million cattle (16 million if buffalo were included): CBD869 at 34710 [10]. This number exceeded the target number for Indonesia achieving beef self‑sufficiency according to the Blueprint: CBD869 at 34710. The "results of this [census] data collection were used as a basis for recalculating local supply capabilities published in a revised edition of the 2014 PSDSK Blueprint": CBD468 at 25315. The results were also used in preparing the Revised Plan (which revised the 2010 Strategic Plan) issued on 2 December 2010. As is explained further below, the results were central in setting the quota for 2012.

[497]

There is no doubt that the census was only one matter which needed to be taken into account in setting the quota at the end of 2011 for the 2012 year. However, it must have been a matter which was of central importance because it informed Indonesia's expectations about what it could and would produce domestically. The Blueprint assumed 12.61 million cattle in 2009 and forecast the most likely position to be 14,231,700 cattle in 2014 (when beef self‑sufficiency would be achieved): CBD410.1 at 17401-2. By 4 July 2011, the preliminary results indicated that the Indonesian cattle population on 1 June 2011 numbered 14.43 million, excluding buffalo: CBD869 at 34710 [10].
Whilst it would no doubt depend on a number of other considerations, the census results would have been (and the evidence indicates that they were) interpreted as indicating that imports could be reduced. The census results were not finalised until November 2011: CBD413.1.
Brett Cattle referred to the evidence of Mr Adiwoso in respect of the census results. He gave evidence that APFINDO had done its own sampling exercise and that APFINDO "believed the numbers were closer [to] between seven to eight million head of cattle": T174.39-41. When asked by his counsel whether he conveyed that information to the Indonesian Government he stated that he provided it "to the Ministers and also the Bureau of Statistics": T174.43-6. Apart from Mr Adiwoso's evidence, there is nothing contemporaneous which suggests that the cattle population was anywhere near as low as seven or eight million.
Assuming APFINDO's "sampling" was conveyed to the Indonesian Government more broadly, it is unlikely to have been taken seriously. First, APFINDO represented "the feedlot industry which is imported cattle from Australia" (T160.9-12, 37), whose interests lay in importing as many cattle as possible and understating the size of the domestic herd. Second, a "sample" carried out by a body with vested interests would not have been treated as more reliable than a well‑funded, specially organised, government census which had been designed to provide accurate information, was regarded in the Blueprint as a "pre‑requisite for success", and which would be used in formulating policies and strategies of critical importance to Indonesia's economy and society (noting the large number of small‑scale livestock farmers in Indonesia). Third, the number suggested by APFINDO of seven or eight million could not have been taken seriously given the information available to the Indonesian Government.
Brett Cattle also referred to Professor Malcolm's evidence that "estimating national herds are very, very difficult in any country, and here, we had a mixture of census, annual surveys and another type of census, and none of those numbers would ‑ you would treat as correct": T616.32-5.
This evidence was referring to various censuses, surveys and statistics in various years. Professor Malcolm also stated, "My honest view is that none of the figures are accurate": T641.21. He considered, in substance, that agricultural economists would not consider that any of the various results contained in the various censuses or statistics would reflect the true position, but that he could not speak for policymakers: T641.31-44.
The contemporaneous documents do not suggest that the Indonesian Government considered the results of the census carried out in June 2011 to be anything other than accurate. Indeed, contemporaneous communications suggest that the Ministry of Agriculture considered the results to be sufficiently accurate to inform its decision‑making and recommendations. Having taken the position in January 2010 that the special census was an essential pre‑requisite to the success of the 2014 BSSP, and having carried out the census at significant expense, it is unlikely that the Indonesian Government would have ignored the results of the census or treated it as other than reflecting a sufficiently accurate factual basis upon which to make further decisions implementing its 2014 BSSP.
It might be noted that the census itself was published in terms which suggested confidence in its results, including (CBD413.1 at 20995):

[501]

Brett Cattle expressly did not contend that the quotas for the 2012 and 2013 year were by way of retaliation or retribution: T713.37-40. The appropriateness of this concession is supported by the fact that, shortly after the Second Control Order was repealed in early July 2011, Indonesia issued 180,000 import permits in respect of the third quarter: SOAF 2 at [38]. It issued a further 172,500 import permits in respect of the fourth quarter: SOAF 2 at [40]. All other things being equal, and recognising that grudges are capable of being held for long periods of time, retaliatory action might have been more likely to occur closer to the offending event rather than some 18 months or 2½ years later. That is particularly so where Australia and Indonesia had a long and strong relationship, and both Australia and Indonesia made substantial efforts to repair the tensions caused by the making of the Second Control Order.
It should be noted, in particular, that Australia was significantly engaged after the Second Control Order in assisting Indonesia with improving its domestic production capabilities to enhance its beef self‑sufficiency program, including through financial assistance.
As mentioned, Brett Cattle's tenth contention on causation was that, in response to what members of the Indonesian Government perceived as an ongoing threat to food security arising from the making of the Second Control Order, the Indonesian Government took immediate steps to decrease its reliance on Australian live cattle to meet its domestic demand for beef, by reducing the quotas and enforcing them strictly: ACS[68]. Brett Cattle contended that the Second Control Order was seen as "present[ing an] immediate risk to Indonesia's food security and that's why the [Indonesian G]overnment felt the need to take this important action to decrease reliance on imports": T717.16-8. Brett Cattle submitted that the Second Control Order reinforced Indonesia's view that the 2014 BSSP should be pursued and caused it to pursue the program more vigorously and faster than it otherwise would have: T712.7-13; ACS[69].
Brett Cattle referred to four matters relevant to this contention.
First, Brett Cattle submitted that "there was no reference in either the [Blueprint] or [the 2010 Strategic Plan] of any plan to achieve self‑sufficiency in beef by reducing or restricting imports of live cattle from Australia in the short term, but rather the 2014 BSSP was premised on continued imports from Australia being necessary in order for Indonesia to achieve self‑sufficiency in beef": ACS[69(a)].
Second, Brett Cattle referred to Dr Krisnamurthi's evidence. Dr Krisnamurthi stated that there were discussions at cabinet meetings following the making of the Second Control Order. Asked about the discussions, he stated (ACS[60(b)(i)]; T224.17-20):

[510]

No doubt, immediately after the Second Control Order was made, members of the Indonesian Government referred to Indonesia's self‑sufficiency policy and stated that Australia's ban on exports to Indonesia was a reason why Indonesia should become self‑sufficient in beef production. However, that had been Indonesia's aim for many years and the push towards self‑sufficiency had been accelerated in early 2010, including by the President's political commitment to the 2014 BSSP (CBD410.1 at 17392) and Presidential Instruction No 1 of 2010 to accelerate the 2010 National Development Priorities: CBD531.1; CBD533. It is likely that Minister Suswono used the Second Control Order in promoting the pursuit of the 2014 BSSP. In the hypothetical Exceptions Order Scenario, Minister Suswono could be expected also to have referred to the Exceptions Order as indicative of the wisdom of pursuing self‑sufficiency.
As to the aspects of Dr Krisnamurthi's evidence referred to earlier, this evidence appears also to relate to the time immediately after the Second Control Order.
As has been mentioned, once the Second Control Order was lifted, the immediate step taken was to issue large numbers of import permits for the third and fourth quarters of 2011. By the time Indonesia came to decide on the 2012 quota, in late 2011, Indonesia had the formal results of its cattle census, issued on 1 November 2011: CBD413.1. By late 2011, tensions between Australia and Indonesia in respect of the live cattle trade had eased from the levels seen in the weeks immediately after the Second Control Order. That is not to say that no resentments or tension remained, but the situation was quite different with good relations essentially restored. At that time, the Indonesian Government would not have considered the prospect of another ban as realistic. Indonesia knew that the live cattle trade was important to Australia and that Australia wanted that trade to continue. Given the events which had just transpired, and the resolution of them in a way which significantly improved animal welfare in Indonesia, the prospect of a further ban was minimal.
By the time of the decision on the 2012 quota, well after the immediate reaction to the Second Control Order recorded in the two documents relied upon by Brett Cattle referred to above, the contemporaneous records indicate that Indonesia's consideration of the quota was being conducted by reference to its views about its domestic production capacity, informed by the census. The Counsellor‑Agriculture from the Australian Embassy met with the Director General of Livestock (Dr Probowo) on 15 November 2011 and "asked about likely cuts to quota due to national herd census results": CBD974. Dr Probowo was reported to have (at 38433):

[512]

The overall "national allocation" on live cattle imports for 2012 was to be decided by the Coordinating Ministry of Economic Affairs based on recommendations from the Ministry of Agriculture and Ministry of Trade: CBD347 (25 November 2011). This appears to have been so even though the formal change in responsibility was not to occur until January 2012: CBD347 at 9671. That is likely because transitional arrangements were in place or because of the impending change in formal responsibility.
As of 25 November 2011, the Ministry of Agriculture proposed 280,000 head and this was to be discussed by officials at the Coordinating Ministry with the Ministry of Trade before making a recommendation to Minister Hatta Rajasa, the Coordinating Minister on 30 November 2011: CBD347 at 9671. Dr Krisnamurthi was reported to have observed "that despite the current low level of imports the domestic market was stable (implication, low cattle imports seem to work)": at 9671. This tends to suggest that Indonesia was content that its domestic production was coping with lower imports. Dr Krisnamurthi was also reported to have "suggested allocation would be based on the number of abattoirs approved by the Ministry of Agriculture for food safety standards (currently 16) which may (significantly) limit numbers": at 9671. To the extent that is accurate as a consideration for setting the quota for 2012, the same position in that respect is likely to have existed in the Exceptions Order Scenario.
Immediately after the quota was set, Mr Ackerman (MLA) was recorded as having conveyed that "the Ministry of Agriculture's calculations for quota are based directly on the results of the cattle survey along with projected local consumption": CBD352 at 9682 [2].
Mr Ackerman was apparently critical of the methodology used in calculating the quota and considered that the "Ministry of Agriculture's high estimates [of cattle numbers] are likely to be driven by a desire to appear to be meeting the self sufficiency goals in the national blueprint": CBD352 at 9682 [2]. However, this does not gainsay that Indonesia set its quota by reference to its views about domestic supply as informed by the census results, which it accepted. On 20 December 2011, Mr Michael Finucan (MLA) sent an email to DAFF which stated that "officials have been adamant in reporting Indonesia is close to self‑sufficiency and can supply 80% of the presumed demand": CBD995 at 38570.
As of 19 March 2012, the Australian perspective was that the significant decrease in "import permits for 2012 for boxed beef and live cattle [was] part of [Indonesia's] goal for self‑sufficiency in beef by 2014": CBD1013 at 38703. It was recognised that "Indonesia's resentment over the lack of consultation ahead of the 2011 live cattle export suspension continues to surface", but no connection was drawn between that fact and Indonesia's setting or enforcement of quotas: at 38703. Rather, the Australian perception was that "Indonesia has determined the level of imports for 2012 based on Government projections of domestic supply and demand": at 38752.
On 18 May 2012, the Assistant Secretary of the Bilateral Trade Branch of the Trade and Market Access Division of DAFF reported in a Minute to the Secretary of DAFF (CBD1031 at 38848):

[524]

Brett Cattle emphasised the reference to "changes in the global and domestic strategic environment", submitting that this was an "obvious" reference to the Second Control Order and surrounding events and compared that to what it described as the "fleeting" reference to the cattle census: T726.1-5. The reference to the cattle census is clear and direct and no more "fleeting" than the reference Brett Cattle emphasised.
The reference to the changed strategic environment, when read in the context of the Revised Plan as a whole, is unlikely to be a reference to the Second Control Order and surrounding events. Beef self‑sufficiency is not the predominant focus of the Revised Plan. It is only one of the 12 programs with which it deals. The reference in the Foreword to the global and domestic strategic environment is more likely to be a reference to the fact that there had been changes in the domestic and global strategic environment since 2010, relevant to the many agricultural products addressed in the Revised Plan. These changes were one reason for revising the strategy which had been put in place on 28 January 2010 some few months after President Yudhoyono's second cabinet was sworn in shortly after 20 October 2009. For example, as at December 2011, the Indonesian Ministry of Agriculture was at various stages of implementing two sets of regulations that would impose significant non‑tariff restrictions on horticulture imports: CBD1020 at 38810; 1013 at 38699, 38755. These were "likely to curtail severely imports of horticultural goods to Indonesia and impose significant costs and impediments on the horticulture trade": at 38810.
The 2010 Strategic Plan summarised the Ministry of Agriculture's "APBN [the National Budget] Financing Needs" in Table 5.1 (CBD412.1 at 20722). Table 5.1 addressed 12 funding areas. Item 4 in Table 5.1 dealt with two matters: beef self‑sufficiency and "increasing the supply of safe, healthy, whole and halal animal foods". Table 5.1 contains a summary of total funding needs and must be read with Appendix 50: at 20793. Within Appendix 50, Item 6 addresses the "Program for Achieving Beef Self‑Sufficiency and Increasing the Provision of Safe, Healthy, Whole and Halal Animal Foods": at 20816. Table 5.1 in the Revised Plan comprises, in modified form, what was Appendix 50 to the 2010 Strategic Plan and Item 6 in the Revised Plan comprises, in modified form, what was Item 6 in Appendix 50 to the 2010 Strategic Plan: CBD414.1 at 21611.
When Item 6 in Appendix 50 (in the 2010 Strategic Plan) is compared with Item 6 in Table 5.1 (in the Revised Plan), it is clear that more funding was allocated to the "Program for Achieving Beef Self‑Sufficiency and Increasing the Provision of Safe, Healthy, Whole and Halal Animal Foods" at 8,596.31 billion rupiah (2,598.88 + 2,858.77 + 3,138.66) for the 2012 to 2014 years (in the Revised Plan), compared to 6,571.20 billion rupiah for the 2010 to 2014 years (in the 2010 Strategic Plan): CBD414.1 at 21626. Brett Cattle correctly submitted that funding for Item 6 in Table 5.1 had been increased.
Brett Cattle submitted that the increase in funding demonstrated an accelerated pursuit of the beef self‑sufficiency program and submitted that the Second Control Order materially contributed to a decision to accelerate the program.
The Commonwealth referred to Dr Krisnamurthi's evidence that, when the Blueprint was announced in January 2010 (the same month as the 2010 Strategic Plan), some of the program was without budget and was to be provided later through a budget adjustment: T836.24-837.6. His evidence included (T261.32-47):

[526]

The Commonwealth also submitted that the budget allocation (a reference to Item 6 in Table 5.1 in the Revised Plan) was "a rolled‑up line item" so that there was "no way to tell what the extra funds were allocated to": T837.11-22.
The 2010 Strategic Plan had been issued almost two years before the Revised Plan. The Blueprint and the 2010 Strategic Plan were issued only a few months after the President's re‑election and the formation of the new cabinet. The Blueprint had been based on "still inaccurate data on cattle population and meat production": CBD410.1 at 17400. Some of the strategies in the Blueprint were unfunded and could not have been included in the 2010 Strategic Plan: T261.32-47 (Dr Krisnamurthi). As has been noted earlier, the Blueprint recorded that "Government funds that have been allocated to achieve the BSSP will continue to be increased": CBD410.1 at 17387. In those circumstances, it is to be expected that the funding increased in the Revised Plan.
Further, there were significant changes and increases across the entire 12 items addressed in Appendix 50 of the 2010 Strategic Plan and Table 5.1 of the Revised Plan.
In total, the budgets in the Revised Plan increased by 18,282.97 billion rupiah for the 2012 to 2014 years: CBD412.1 at 20834; CBD414.1 at 21642. There were increases comparable to, or larger than, the increase in respect of Item 6 in other areas of the budget. For example, Item 3 was the "Program to increase the production, productivity and quality of food crops to achieve self‑sufficiency and sustainable self‑sufficiency"'. In the 2010 Strategic Plan total funding for the 2012 to 2014 years was 4,677.21 billion rupiah: CBD412.1 at 20800. The funding for Item 3 in the Revised Plan was 12,355.97 billion rupiah: CBD414.1 at 21616. The shifting budgetary allocations in other agricultural areas, particularly the increases, is what one would expect to see, and suggests that the Revised Plan was introduced in the ordinary course, consistently with what one would expect.
Although Brett Cattle was right to identify an increase in expenditure in Item 6 of the 12 items in Table 5.1 (previously Appendix 50), consistently with what one would expect, it is important to recognise that Item 6 addresses more than beef self‑sufficiency: CBD414.1 at 21626. The funding in Item 6 related both to the 2014 BSSP and "increasing the supply of safe, healthy, whole and halal animal foods": at 21626. Thus, it addresses "meat production" and "livestock" generally, in addition to making specific mention of beef, buffalo, chicken, milk and eggs: at 21626.
The bulk of the additional funding in Item 6 of the Revised Plan, compared to the 2010 Strategic Plan, was directed to an increase in the quantity and quality of livestock semen and breeding stock, being Item 6.1: CBD414.1 at 21626. Item 6.1 is not solely concerned with beef cattle, although Item 6.1(4) related specifically and only to female cows and buffalo. Table 3.6 (in both the 2010 Strategic Plan and the Revised Plan) makes clear that the "7 superior livestock commodities" were beef, buffalo, goat/lamb, pork, chicken, duck and dairy cows: CBD412.1 at 20671; CBD414.1 at 21559. It is clear from the two pages which follow Table 3.6 (and the balance of the 2010 Strategic Plan and Revised Plan) - for example, the policy of "increasing the availability and quality of sperm and semen" - that the funding in Item 6.1 relates to all livestock, not only cattle: at 21559-60. Similar observations may be made about the balance of the sub‑items within Item 6 which explain the total funding referred to in Item 6. There is no doubt that beef self‑sufficiency was an important target of the increased funding, but it was by no means the sole target.
Brett Cattle also referred to the increase in production targets and self‑sufficiency ratio targets in the Revised Plan.
The Revised Plan set an average annual increase of 7.49% for beef, compared to 7.30% in the 2010 Strategic Plan: CBD414.1 at 21559; CBD412.1 at 20671 (although the Revised Plan also gives other rates such as 7.13% at 21548, 21550, 21570, 21656 and 7.4% at 21586, the former of which appears to refer to beef and buffalo combined).
The Revised Plan increased the target beef self‑sufficiency ratio for 2012, 2013 and 2014 compared to the 2010 Strategic Plan. The Revised Plan set targets for domestic beef production at 82.5% for 2012, 86.2% for 2013 and 90.3% for 2014: CBD414.1 at 21626; CBD414 at 21328; MFI 16. The corresponding targets in the 2010 Strategic Plan were 80.5%, 85.29% and 90%: CBD412.1 at 20816.
The Commonwealth submitted that the revised domestic production targets were more likely to be a response to the cattle census: T838. This submission should be accepted. One would expect the domestic production ratios to be increased in the Revised Plan in light of the new data which had been obtained in the census. There would be no rational basis not to change those figures given the Blueprint had assumed only 12.61 million cattle, while later information after a thorough census had revealed a higher cattle population. The census was expressly mentioned in the Foreword to the Revised Plan. This conclusion is further supported by the fact that, as one would expect given the higher cattle numbers, the Revised Plan increased the target ratio for domestic beef contribution to national meat production from 19.8% (2012), 20.6% (2013) and 21.1% (2014) to 21.4%, 22.5% and 23.5%: CBD414.1 at 21626; CBD412.1 at 20816.
That the domestic production target was revised because of the census is also supported by a later publication, the Ministry of Agriculture's 2014 Performance Report which stated (CBD468 at 25315):

[529]

As noted earlier, Brett Cattle submitted that the quota for 2012 was strictly enforced. This proposition should be accepted in that fewer cattle (276,295) were imported than the quota which had been set (283,000).
Brett Cattle submitted that "[t]his marks a change in the Indonesian Government's approach, as in 2010 the Indonesian Government had announced that it would only issue 452,000 import permits, but by the end of 2010 there had been a total of 514,935 head of live cattle imported": ACS[68(d)].
The circumstances in 2010 were quite different to 2012. In 2010, there was no quota system, and no quota was set at the end of 2010 for the 2011 year. On 28 July 2010, the Indonesian Government informed importers that import permits would only be issued to import 452,000 head of live cattle into Indonesia in 2010. This was not a formal quota. Further, this occurred in the context of the recent introduction of the 2014 BSSP and its strategies which included enforcement of existing, and development of new, import regulations. The quota for the 2012 year was the first quota ever set. It was set in compliance with new regulations, something which had been anticipated by the 2014 BSSP which contemplated the introduction of regulations and the control of imports, including through tariff and non‑tariff barriers.
Accordingly, "strict enforcement" of the quota could not be said to have marked a change to any existing approach to the treatment by Indonesia of formal quotas set by the Coordinating Minister after consultation. On the other hand, it may be accepted that Indonesia had, in 2010, permitted imports beyond the level of 452,000 which had been communicated by the Director General of Livestock in a letter dated 28 July 2010. This does not bear the significance for which Brett Cattle contends.
As the facts set out above demonstrate, Indonesia considered increasing the 2012 quota during the 2012 year - see, for example: CBD1017. This involved discussions between Ministries and it is tolerably clear that, in 2012, the Ministry of Trade and the Ministry of Agriculture had differing views as to whether quotas should be varied: CBD1017 at [6]. At that time, the "key indicator for the Ministry of Trade that demand for beef was higher than available supply was rising prices, and they could see that prices were now going up". For its part, the Ministry of Agriculture wanted to adhere to the self‑sufficiency projections: CBD1017 at [12]. The "Ministry of Agriculture ... remained adamant that supply was sufficient" having regard to the census results: CBD357 at 9693 [3]; CBD1018 at 38805 [3].
The differences in opinion of the Indonesian Ministries at this time were resolved by bringing forward 5,600 tonnes of boxed beef from the boxed beef quota for the second half of the year, without altering the overall boxed beef quota: CBD1023 at 38817. No change was made to the live cattle quota: at 38817. Indonesia's continued consideration of whether the quota should be altered was conducted by reference to a re‑examination of domestic supply conducted by a team led by the Ministry of Agriculture: at 38817 [3]. The Ministry of Agriculture maintained the view that supply was sufficient, and that beef self‑sufficiency had been achieved or was close - see, for example: at 38818 [6].
The Ministry of Agriculture was not the final decision‑maker on such issues, albeit its contribution to the decision and influence was evidently significant. Ultimately, increases in quotas were a difficult political decision given the government considered it needed to be seen to be protecting the interests of farmers: CBD1078 at 39285 [6]; CBD1087 at 39333 [8] (an observation made in relation to the quota for 2013, but equally applicable to 2012). In 2012, it was reported "that beef had become intensely politicised and was now the flagship product for [Minister] Suswono's claim that progress had been made towards food self‑sufficiency" because "of the five key food commodities identified in the self‑sufficiency blueprint, only beef showed any evidence that production had increased", referring to the census: CBD1033 at 39332 [6].
The evidence does not establish that the 2012 quota was adhered to or was strictly enforced for reasons associated with the Second Control Order. Rather, the evidence indicates that the quota was adhered to because that was the number of cattle which the Indonesian Government considered should be imported consistently with its 2014 BSSP as it then stood.
The level of Indonesia's adherence to the quota it set for 2012 would not have been different in the Exceptions Order Scenario.

[530]

The quota for 2012 was set primarily by reference to the 2014 BSSP (which had been introduced in January 2010), as modified (including by the Revised Plan), and Indonesia's view about its likely domestic supply capacity for the 2012 year, informed by the census results. The live cattle quota was reviewed throughout the year and the decision taken that it need not be altered.
The Second Control Order did not materially intensify or accelerate Indonesia's pursuit of its beef self‑sufficiency program (that is, the 2014 BSSP as it stood from time to time). Nor did it relevantly alter the level at which the 2012 quota was set or the degree to which it was enforced.
Further, it is difficult to see that Indonesia would have acted differently in the Exceptions Order Scenario, even if the Second Control Order did play some small material causal role in the setting or enforcement of the 2012 quota (which it did not). The Second Control Order came as a shock to Indonesia and reinforced the view it already held that it was in Indonesia's interests to pursue beef self‑sufficiency. Indonesia's reaction to the First Control Order was not as marked, but this only banned exports to 12 identified abattoirs. It does not follow from this fact that Indonesia would not have reacted negatively to an Exceptions Order. An Exceptions Order would have been implemented "in an orderly way after seeking to gain the cooperation of the Indonesian Government and others": LJ[405]. Such an order would have involved a total ban with the power to grant exceptions. This would have been significantly more disruptive, and involved a greater threat to Indonesia's immediate beef supply, than the First Control Order. Consultation before implementation would have resulted in the Exceptions Order not coming as a shock, and the fact of consultation would have lessened or eliminated the offence taken, but there is no good reason to think that such an order would have had any meaningfully different consequence in terms of Indonesia setting and enforcing quotas than the consequence in respect of those matters in the Second Control Order Scenario. Brett Cattle expressly did not contend that the quotas for the 2012 and 2013 years were by way of retaliation or retribution: T713.37-40. It might also be observed that Brett Cattle did not seek to establish through detailed evidence of any of the witnesses how or why the reaction would have been materially different with respect to quota levels and enforcement in the hypothetical Exceptions Order Scenario compared to the Second Control Order Scenario. The Court does not draw any adverse inference about this, recognising it is always difficult to establish what would have occurred in hypothetical circumstances and also recognising, in the applicant's favour, that it has been placed in the position it has by conduct of the Commonwealth which has been held to be wrongful.
The hypothetical Exceptions Order is likely also to have reinforced the view Indonesia already held that it was in its interests to pursue beef self‑sufficiency with the vigour it had been pursued since January 2010.
The central matter that changes in the Exceptions Order Scenario is that, instead of a total ban, there would have been a total ban with the power to permit exports by way of exception. All of the other matters remain the same. Four Corners would have aired its program in a context where Indonesia was vigorously pursuing a reduction in imports. Exports to Indonesia would have been seriously affected by a total ban with the power to grant exceptions. Indonesia would have had to take action by way of improvements to animal welfare to resume the usual trade relations and to seek to avoid similar situations occurring in future. Australia would have introduced an ESCAS, albeit somewhat earlier than it did. In the Exceptions Order Scenario, there would have been a risk of further or similar interruptions in the future, particularly if the level of improvement in Indonesia's abattoirs was not achieved as quickly or as well as it was in the Second Control Order Scenario. Indeed, further animal welfare issues were filmed and raised in early 2012 at four facilities in two locations in Jakarta - see: CBD1013 at 38753; CBD1022 at 38815; CBD1031 at 38847-8; CBD1036 at 38867. The response to these may have been different if the Second Control Order and its consequences had not occurred. There may have been more animal welfare issues raised if the Second Control Order had not been made because it is likely that, in the Exceptions Order Scenario, the actions taken to address the issues raised would have occurred differently and potentially at a slower rate than the relevant issues were in fact addressed. The hypothetical Exceptions Order may have been in place for longer than the Second Control Order which was repealed after about a month.
These issues do not need to be pursued at length because, as has been mentioned, the Second Control Order did not materially contribute to the level of the 2012 quota or the degree to which that quota was enforced.

Brett Cattle Pty Ltd v Minister for Agriculture

At a glance

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Before

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Judgment (542 paragraphs)

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Legislation Cited (2)