Australia is to spend $A60 million over the next decade to help Indonesia grow its cattle industry.
The ABC reports the announcement was made by Prime Minister Kevin Rudd after a meeting with President Susilo Bambang Yudhoyono in Bogor, near Jakarta, on Friday.
"It's good for Australian beef industry, It's good for Indonesia investors and good also for Indonesian consumers,'' he said.
Mr Rudd also called for Indonesia to relax its quotas on cattle imports from northern Australia.
The ABC reports Mr Yudhoyono has not yet agreed to this, but welcomed the extra investment.
The Northern Territory Cattlemen's Association welcomed the announcement.
"We've got to temper our expectations a little bit," said spokesman Luke Bowen. "We are not expecting things to change overnight, but this is about building foundations that can be built on."