Australian Trade Minister Steven Ciobo and Indonesian Trade Minister Thomas Trikasih Lembong said in a joint statement talks would resume in May after a lengthy hiatus spanning a period of diplomatic tumult.

Australian Prime Minister Malcolm Turnbull visited Indonesia last year in the hope of smoothing over ties strained by rows over spying, the execution of Australian citizens in Indonesia and Australia’s tough asylum-seeker policies.

Indonesia is Southeast Asia’s largest economy but is Australia’s twelfth largest trading partner, with two-way trade worth just under A$12 billion (C$11.9 billion)in 2015.

“While Indonesia is a close neighbour and firm friend, our trade and economic relationship can and should be performing better,” Ciobo said in a statement.

“I am pleased to announce the reactivation of the Indonesia-Australia Business Partnership Group to ramp up business links.”

Australia’s live cattle exports to Indonesia have been a source of friction as Indonesia, trying to develop self-sufficiency in its livestock market, has thrown up barriers to Australian imports.

Lembong suggested that the live cattle export issue may be put aside in the hope of reaching a broader agreement more quickly.

“Sometimes maybe we need to call time out on the most contentious issues and work on areas where we can more easily find common ground,” he told reporters in Canberra.

“Personally, my priority is to try to broaden the dialogue so we don’t get bogged down on old issues of contention.”

Canada’s main agrifood exports to Indonesia are in non-durum wheat, alone worth over $428 million in 2014. Cereal crops alone made up over 32 per cent of Canada’s exports to Indonesia in 2015.

Australia and Indonesia have a history of diplomatic turbulence stretching back decades, but relations reached historic lows under former Australian Prime Minister Tony Abbott, who was ousted in a party coup in September.

Just one month after he took office in September 2013, revelations that Canberra had spied on President Susilo Bambang Yudhoyono and his wife sent relations plummeting.

Abbott’s policy of towing back to Indonesia vessels carrying asylum seekers, while popular at home, infuriated Jakarta, which sees it as an infringement on its sovereignty.

Tension reached a peak in May 2015 when Indonesia executed two Australian members of the so-called “Bali Nine” drug trafficking ring, despite intense lobbying from Canberra.

— Matt Siegel is Reuters’ senior political correspondent in Sydney, Australia.

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Australian fruit exports are set to hit a record A$2.27 billion (C$2.26 billion) next season, up 10 per cent from the previous 2014-15 season, and backpackers on working holiday visas make up the bulk of fruit pickers during harvests.

Under the policy, foreign travellers on working holiday visas would have been required to pay tax of 32.5 per cent on every dollar earned, when previously they paid no tax on income up to A$18,000, the same as locals.

“Concerns have been raised about the impact of the 2015 budget measure on tax arrangements for Working Holiday Makers, particularly our global competitiveness as a backpacker destination,” Tourism Minister Richard Colbeck said in a statement.

“We have therefore decided that the proposed tax arrangements require further discussions to ensure Australia does not lose market share in backpacker visitation.”

Australia faces a ballooning budget deficit of about A$40 billion this year and the planned increase in tax for working travellers was estimated to net A$540 million between 2016 and 2020.

The government has encouraged backpackers to work on farms with special visas allowing them to stay for a second year if they do three months work in rural Australia.

But horticulture producers are already struggling to find enough labour, and farmers have argued that the potential additional labour shortfall caused by the tax would cause fruit to simply drop off trees and rot, making it unusable.

Australia’s A$34.8 billion international tourism industry was also threatened by the higher tax, with young travellers potentially deciding not to stay as long.

In total backpackers spend A$4.3 billion a year, worth about 12 per cent of all international tourist spending.

“It is essential we continue to put in place the right policy settings that support the super growth sectors of tourism and agriculture as the economy transitions from the construction phase of the mining industry,” Colbeck said.

— Matt Siegel is Reuters’ senior political correspondent in Sydney, Australia.

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The El Nino phenomenon is driven by warm surface water in the eastern Pacific Ocean and is associated with extreme droughts, storms and floods. “ENSO neutral” periods are marked by ocean temperatures, tropical rainfall patterns and atmospheric winds near the long-term average.

“A number of El Nino-Southern Oscillation (ENSO) indicators suggest that the 2015-16 El Nino has peaked in recent weeks,” the BOM said in a statement.

“Climate models suggest the 2015-16 El Nino will decline during the coming months, with a return to ENSO neutral likely during the second quarter of 2016.”

The agency said that based on data since 1900, some 50 per cent of El Ninos have been followed by a neutral year, while 40 per cent have been followed by a La Nina, marked by extensive cooling of the central and eastern tropical Pacific Ocean.

During the last major El Nino in 1997-98, heavy rains and flooding led to thousands of deaths, loss of crops and extensive damage to infrastructure in Ecuador, Peru and Bolivia. In Indonesia and Malaysia, drought linked to the weather event had hit palm oil production and pushed prices higher.

In November, the World Meteorological Organization said it expected the current El Nino to become one of the strongest on record, warning that the intensity of the event could be exacerbated by climate change.

While the U.N. weather agency did not predict when the El Nino would start to subside, it said the weather event normally reaches maximum strength between October and January, then persists through much of the first quarter.

— Reporting for Reuters by Matt Siegel in Sydney.

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Temperatures have topped 40 C in large parts of Australia’s key agricultural regions for most of the past week, with the mercury topping 48 C in the central west Queensland town of Birdsville.

The heatwave is moving east across Australia, prompting health warnings on Friday in some of the country’s biggest cities and firefighters were already battling bushfires.

But it is in the outback that soaring temperatures have had the most devastating impact, especially on cattle farmers in Queensland, which accounts for about 50 per cent on the national herd.

“Water supplies are fast diminishing and whatever feed supplies that were left are cooking off to the point where there won’t be any left,” said Charles Burke, a beef farmer and chief executive of Agforce, a Queensland cattle industry group.

Monsoon rains in Australia’s north failed last summer and the entire continent endured its hottest year since records began in 1910, the Bureau of Meteorology said on Friday.

Average temperatures were 1.2 C above the long-term average of 21.8 C, breaking the previous record set in 2005.

“The new record-high calendar-year temperature averaged across Australia is remarkable because it occurred not in an El Nino year, but a normal year,” David Karoly, a climate scientist from the School of Earth Sciences, University of Melbourne, said in an emailed statement.

The El Nino weather pattern is a warming of ocean surface temperatures in the eastern and central Pacific and usually brings hot, dry, and often drought conditions to Australia.

Fried eggs

In the remote town of Marree, 700 km north of Adelaide, one resident tested the folklore that you can fry an egg on the road during an outback heatwave.

“You hear stories of people frying an egg on a shovel, so we set up a shovel this morning out the front and sure enough we’ve got an egg there that’s slowly frying away,” publican Phil Turner told the Australian Broadcasting Corporation.

“So yep, we fried an egg on a shovel.”

Faced with such conditions, farmers are being forced to slaughter more cattle in the current 2013-14 season.

Australia’s cattle herd will fall to 25 million head during the 2013-14 season, the lowest since the 2009-10 season, due to increased slaughtering, the Australian Bureau of Agriculture and Resource Economics and Sciences said.

The country is the world’s third-largest beef exporter, with sales during the 2013-14 season tipped to reach A$5.4 billion (about C$5.16 billion).

Should Australian farmers continue to send cattle to slaughter due to the heatwave, future exports could fall as farmers eventually rebuild stocks when conditions improve.

The soaring temperatures have also renewed focus on climate change policy in Australia under the new government.

While Australian Prime Minister Tony Abbott has said he accepts the reality of climate change, he abolished the country’s Climate Change Commission in September, and rejected any link that global warming was responsible for a series of bushfires across New South Wales state in October.

One of Abbott’s major policies is to overturn the previous government’s carbon tax, which was aimed at reducing greenhouse gas emissions in an effort to tackle climate change.

“On the science perspective, which is the basis for taking action, you’re getting very very mixed messages from this government,” Will Steffen, an adjunct professor at The Australian National University, said in an interview.

— Matt Siegel and Colin Packham are Reuters correspondents covering politics and commodities respectively from Sydney, Australia.

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