Plans by a state-owned Indonesian business to buy large stakes in Australian cattle "ranches" have reportedly been shelved, with the company blaming the high US dollar for its decision.

The agribusiness PT Rajawali Nusantara Indonesia had planned on acquiring stakes in cattle stations capable of holding up to half a million head, The Jakarta Post reports.

But the company's director now says the plan is "unfeasible" due to a rise in the US dollar and difficulties in acquiring an import permit from Indonesia's agriculture ministry.

Indonesia's desire to purchase cattle country in Australia has proved controversial in the past, with elements of the Nationals Party opposing proposals on the grounds of national interest.

All proposals from state-owned enterprises are automatically scrutinised by the Foreign Investment Review Board, but the federal government has said it's open to the idea of Indonesia buying Australian land.

As its middle class swells and beef demand grows, Indonesia has sought large stakes in established pastoral operations in northern Australia to secure its own supply.

Its long-term goal is to achieve self sufficiency in beef, but in the meantime it's seeking to reduce dependency on imports to avoid supply problems that have proved troublesome in the past.

The cattle trade is a sensitive issue between Australia and Indonesia.

Tensions were flared in 2011 when the Australian government imposed a temporary ban on live cattle exports following allegations of cruelty in Indonesian abattoirs.

The ban was lifted a month later but Indonesia subsequently introduced import quotas, reducing Australian beef imports by some 75 per cent, in a bid to lift national self-sufficiency.

Australian cattle exports to Indonesia have never fully recovered from the temporary ban, with farmers later dealt a second blow when a drought swept across northern Australia.

It still proves to be a politically potent issue, with Indonesia's agriculture minister asking importers not to buy Australian cattle after a spying scandal erupted late last year.

Trade Minister Andrew Robb earlier this year said economic ties with Indonesia had not been "in any way affected" by the dispute over spying, and the live cattle trade had actually grown.

The West Australian

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