Indonesian Cabinet has approved a plan to buy one million hectares of land in Australia to breed its own cattle.
Overnight, Indonesia's state enterprises minister Dahlan Iskan said young cattle would be reared in Australia and taken to Indonesia to be lotfed for market.
ABC Radio reports this morning that the move is designed to overcome beef supply problems which have pushed local prices to record highs and the clearest signal yet that it wants to lower its dependence on the current live export system.
"Breeding cattle in Australia is cheaper, but feedlots in Indonesia are three times cheaperm (than Australian)," Mr Iskan said. "We hope this measure will go some way to resolving the issue of beef availability in Indonesia."
If approved by Australia's Foreign Investment Review Board, the Indonesian operation would be run by one of Indonesia's state-owned enterprises, such as Rajawali Nusantra Indonesia (RNI).
Mr Iskan said RNI already had a history of selling boxed beef.
Rural Press reports today that it is unclear if Indonesia plans to buy northern rangeland properties or make a bigger diversified investment in more productive land.