STEELMAN TURNS RANCHER © Duncan Graham 2007
By 2010 there'll be an annual national shortfall of six million cattle and the unmet demand will cause domestic meat prices to rise, according to research conducted by Budi Santosa.
"Every year the consumption of beef almost doubles," he said. "This is happening as the tastes of the Indonesian middle class change, and as they become more affluent."
The president director of the East Java agricultural machinery manufacturer PT Agrindo is moving slowly out of daily control of the business that has dominated his life, leaving administration to family members.
To fill the vacuum he's shifting his significant energies from making farm equipment – particularly lightweight tractors, land-tilling gear, pumps and rice mills – into imported cattle raised in feedlots. A shipment of more than 200 steers and young bulls from Australia is due in early July.
Yards are currently being constructed at the rear of Agrindo's Gresik plant southwest of Surabaya to take a further 2,000 cattle. Feedlots are reported to be expanding in Indonesia to meet the anticipated beef boom.
"I've always liked animals," Budi said. No empty words: Timor deer roam the factory compound. Crocodiles paddling in a pool against the boundary lie ready to snap foolhardy intruders. Nearby is a pen of the rare Javanese warty pigs.
"The cattle enterprise started as a hobby when I was on a Surabaya city committee investigating waste disposal," he said. "I thought it more useful to convert green feed to meat, so bought some local cattle and fed them rejected cornhusks and leaves collected from the markets.
"I started researching animal nutrition and marketing on the Internet and in government departments. The more I learned the more I discovered about changing patters of meat consumption and the developing taste for beef.
"But I could never buy an even line of cattle in sufficient numbers locally. Trading was complicated and the prices jumped when sellers knew I was in the market. So I've started buying from overseas."
The new company is called AgriRanch and the idea is to import cattle around 200-kilograms liveweight and re-sell for slaughter when they're around 320 kilograms. Returns rise significantly when white young bulls are sold at Idul Adha, the Muslim feast of the sacrifice ahead of the pilgrimage to Mecca.
The venture is being funded from profits generated by Agrindo.
It sounds easy money, but many challenges are being encountered. In their homeland the Australian Brahman-cross cattle roam free in large paddocks, graze pastures and seldom see humans. They're wild and often aggressive and need much patient handling to adjust to life behind bars in the tropics.
Australian sellers prefer to ship heavier cattle that can withstand the rigors of sea travel. These cost about AUD $ 1,500 (Rp 11 million). But this gives less time to fatten the beasts in Indonesia and so reduces profit.
The Indonesian government, under pressure from cattle buyers, has been pushing exporters to send smaller and cheaper beasts. The feedlots want to hold animals for about 100 days before resale.
Depending on weather conditions a ship can carry around 3,500 cattle. AgriRanch is expanding because the unit price is cheaper buying a full load. But that needs extensive infrastructure – strong holding yards, ample feed, experienced stock workers and trucks.
When he's taken his pick from a shipment Budi plans to sell surplus animals direct to local buyers in small lots.
AgriRanch workers are building handling facilities with recycled material. Pipes from a small shipyard also run by the company are being cut and bent into shape for use as cattle rails.
A former family planning clinic discarded by the government has been converted into an office. Equipment from a bankrupt restaurant forms the basis of an autopsy room where the carcasses of dead stock can be examined for signs of disease. AgriRanch already employs a vet.
Imported cattle are now quarantined for ten days in West Java but AgriRanch plans to set up an approved facility in East Java. Local abattoirs are still not up to international health and hygiene standards so the meat market remains local.
Budi is determined that the whole enterprise will follow modern environmental standards, with yard washdown being used to fertilize and irrigate crops that will feed the cattle. Dung will be channeled into a biomass plant to generate electricity from methane.
Dry feed supplements using waste from noodle factories, rice straw and shredded coconut are being analyzed in an on-site laboratory to determine nutrient values when used as supplementary feed. AgriRanch is trying to encourage villagers to use dry feed to boost milk yields in dairy cows and speed growth in beef cattle.
Budi is an eclectic and inventive businessman keen to experiment and find engineering solutions for problems that bedevil others. Not all are money makers: He's collected and restored six cars used by first president Soekarno that appear in antique motor shows and are sometimes lent out for weddings.
To get around the 13-hectare factory and the 15-hectare farm he uses a fuel-frugal Japanese hybrid golf cart powered by electricity supplemented by a small petrol engine.
"Our concept is that anything that can be recycled should be used," he said. "Why buy new when there are adequate materials available from elsewhere? I'm not into status – I don't wear expensive clothes, rings and a Rolex – I'm happy with a cheap and lightweight watch.
"I'm testing an electric fly-catching machine from Taiwan that can be used around the yards. If it's effective the flies will then be fed to catfish. Everything has its uses."
POWERED BY RICE
PT Agrindo's roots go back to 1942 when the Tan brothers built a small workshop in Malang (central East Java) with two workmen making bed frames and bicycle parts. The factory has expanded and moved into other production but still operates at the original site.
The company is now one of six enterprises in the Rutan Group with more than 2,000 direct and sub-contract workers. It has introduced quality management systems and has international certification.
Although Agrindo has diversified, built a foundry and makes pumps for export, its core business remains the fabrication of small-scale machines for use in Asian agriculture – particularly in growing and harvesting rice.
It claims to have the largest rubber roller manufacturing plant in Indonesia, making parts for rice milling machines throughout Indonesia, and exporting to 17 countries. The output is 200,000 units a month.
Agrindo will soon be building Mitsubishi engines under licence for use in farm equipment.
(First published in The Jakarta Post 23 July 07)