The introduction of frozen Indian buffalo meat in Indonesia has halved demand for Australian cattle, according to industry representatives.

Indonesia is Australia's largest live cattle market, taking more than 700,000 head in record years.

But in recent years the price of Australian cattle has skyrocketed, reaching unprecedented highs.

As a result, in 2016 the Indonesian Government allowed frozen Indian buffalo meat to be imported to provide its 260 million people with a cheaper form of protein.

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The introduction of that meat to the market has seen a dramatic reduction in demand for Australian cattle, with just over 500,000 head sourced last year according to Meat and Livestock Australia. That is down 16 per cent on last year.

Australian exporter Kevin Mulvahil from South East Asian Livestock Services (SEALS) said it is having an affect on the whole industry.

"It is not just the exporter and producer, it is all of those involved in the supply chain," he said.

This feedlot in West Java has had to reduce its orders for Australian cattle as a result of Indian buffalo meat infiltrating the Indonesian wet markets. ( ABC Rural: Lydia Burton )

"With decreasing export numbers the holding yards, trucking companies and other service providers to the industry will all see diminished incomes because they are very much reliant on live exports for their main source of income."

Indian buffalo meat "killing us"

It is not only the Australian industry that has felt the affects, as feedlots in Indonesia are dependent on live cattle from Australia.

Feedlot manager Nyoman Budiasa from JJAA Juang Jaya Abdi Alam (JJAA) feedlot in Lampung compared this difficult period to the live export ban.

"This is the second toughest time [for industry] with demand [for Australian beef] reduced about 60 per cent. The first tough [time] was in 2011 when [Australia temporarily banned live exports]," he said.

Paulus Hadi Subroto runs a feedlot in North Sumatra, fattening up to 9,000 head of mainly imported Australian cattle per year.

When asked what impact frozen buffalo meat is having on his business, he said with a sigh "It's killing us".

"The frozen buffalo meat that is coming into Indonesia is killing the cattle industry. It is not just the live import cattle industry, but the small scale farmers [are feeling] the impact also," Mr Subroto said.

"The butchers are reducing their cuts and reducing the number of cattle they are buying from feedlots.

"However much you reduce your price, you still can't beat the frozen buffalo meat."

Indian buffalo not identified in wet markets

Fresh Australian beef and frozen Indian buffalo meat is mixed in the wet market and all sold as 'beef'. ( ABC Rural: Lydia Burton )

One of the cattle industry's main concerns is that the Indian buffalo meat is being sold alongside fresh Australian beef in local wet markets, where the majority of Indonesians buy their beef.

But the Indian buffalo meat is not identified as such, so consumers are unaware what they are buying is not Australian beef processed in Indonesia, regarded as the best quality meat.

Regina Hartono is the Director of PT Hade Dinamis Sejahtera feedlot in West Java.

"Since the introduction of Indian meat, in order for us to stay competitive we need to follow their pricing which means we need to lower our prices," she said.

"This year we only sell [Australian cattle] for 40,000 Rupiah. We bought these cattle from Australia when the price was $3.10 plus tax, translating to 45,000-46,000Rp."

The other contributing factor is that the Indonesian Government have set a ceiling price for beef to ensure the price stays affordable for the large population.

Ms Hartono said as a result, her company has been forced to reduce its orders for cattle from Australia.

"We are not very optimistic. That is why we only import 1,000 cattle a month. If the condition was better we would import more," she said.

Demand for Australian cattle has more than halved since the introduction of Indian buffalo meat in Indonesia. ( ABC Rural: Lydia Burton )

"Last year we were importing 1,500 a month. We are not a big player because we just started in 2016, so we have been gradually growing. But with the pricing we have been growing very slowly."

Even with the price of Australian cattle falling more than 50 cents since the start of this year, both Indonesian and Australian industry representatives would like to see less Indian buffalo meat infiltrating the market, or for that meat to be identified as such in the wet markets.

"We are not seeing any signs of imports [of frozen Indian buffalo meat] slowing," Ms Hartono said.

"[We would like to see] Indian meat imports regulated so that it leaves more room in the market for feedlot players because if they keep on importing and importing there will be no space for us to be in the market.