The Indonesian government approved on Wednesday a plan to purchase 1 million hectares of farmland in Australia to solve the country's beef supply problem.

Indonesia's self-sufficiency policy is being blamed for the price of beef prices hitting record prices in the past 12 months. The policy restricts imports of beef from Australia and other nations.

Dahlan Iskan, Indonesian state enterprises minister, said the cattle would be bred in Australia, but would be brought to Indonesian feedlots where the cost is three times cheaper than in Australia.

The planned cattle station would be operated by Rakawali Nusantra Indonesia, a state-owned enterprise.

The Indonesian government would first decide on a piece of land, which would need the subsequent approval of the Foreign Investment Review Board of Australia.

The National Farmers' Federation gave its thumbs up to the Indonesian plan because of the boost it would provide Australia's agriculture sector.

"Our sector will not survive without a level of foreign investment ... If it's part of a broader solution where the trade is continuing and they invest in that property and in infrastructure, that could in fact mean more jobs for Australians," federation head Matt Linnegar said.

The board could block Indonesia's plan to buy Australian land, but the foundation pointed out that the number of cattle that could be bred on such a size property would not be a threat to Australia's domination of the cattle import market. It added there are enough land holdings that could be Indonesia.

RELATED STORIES