Aus/Indo leaders’ talks produce farm export modifications

Aus/Indo leaders’ talks produce farm export modifications


Farm Online News
Indonesian President Joko Widodo and Australian Prime Minister Malcolm Turnbull.

Indonesian President Joko Widodo and Australian Prime Minister Malcolm Turnbull.

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Changes to sugar and cattle exports resulted from talks between Indonesian President Joko Widodo and Malcolm Turnbull at the weekend.

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A TRADE barrier on Australian sugar exports to Indonesia will be lowered in exchange for eliminating tariffs on pesticides and herbicides sold to Australia, while new changes to the weight and age limit on live cattle exports have also been welcomed.

Those outcomes for Australian agriculture resulted from talks held between Indonesian President Joko Widodo and Australian Prime Minister Malcolm Turnbull at the weekend.

“We’re very pleased to have reached agreement where Indonesia will lower its’ sugar tariff on Australian sugar to the ASEAN level of 5 per cent,” Mr Turnbull said.

“We in return will eliminate tariffs of pesticides and herbicides coming from Indonesian suppliers to put them on an equal footing with out other major trading partners.

“This will provide Indonesia with better access to quality Australian sugar at more competitive prices and of course its good news for Australian exporters allowing Australian sugar to compete on a level playing field with other suppliers.

“And ensuring a win-win for Indonesian consumers and Australian exporters, we’ve agreed over longer term permits, a wider range of cattle both in terms of weight and age, can be exported to Indonesia.”

Changes to improve Australian live cattle exports to Indonesia were welcomed by Federal Agriculture and Water Resources Minister Barnaby Joyce.

In a statement, he said Indonesia had advised of revised regulations increasing the age limit of live feeder cattle eligible for import, while the weight limit was increased from 350 kilograms average weight to maximum 450kgs.

Mr Joyce said the changes would allow better business planning for Australian exporters, increase the range of cattle eligible for export and ultimately improve returns at the farmgate.

He said import permits had also now been extended from four months to one year.

“This is great news for both our farmers and exporters as it brings greater stability to the trade and allows for longer term planning,” he said.

“With an increase in the weight limit from 350kgs to 450kgs for live feeder cattle, alongside an increase in the age limit, Australian farmers will have the ability to produce a greater range of cattle for the Indonesian market at competitive prices.”

According to recent figures, Australian sugar exports to Indonesia in.2015/16 were valued at about $477 million, with the volume at about 1000 kilo tonnes of raw sugar, making it the second biggest market destination behind South Korea after being the biggest, the year before.

In 2015/16, Australia’s live cattle exports to Indonesia were valued at about $578m.

A joint statement from the Australian and Indonesian leaders from their annual meeting said they agreed on the importance of maintaining stable food supply and affordability and reaffirmed their commitment to build cooperation in the beef and cattle industry.

It said the two leaders recognised the progress made so far through the Partnership on Food Security in the Red Meat and Cattle Sector and the focus on building a strong integrated supply chain in cattle and beef products between the two countries.

“They agreed that market-based solutions and building capacity are the best means to ensure strong and productive industries, stabilise prices and grow markets,” it said.

Mr Turnbull told the media the two leaders were “very committed” to concluding a high-quality bilateral Free Trade Agreement, the Indonesia-Australia Comprehensive Economic Partnership, by the year’s end.

“This will facilitate more opportunities for Australian and Indonesian businesses and create more jobs for both Australia and Indonesia,” he said.

“We are both vibrant democracies that stand for mutual respect and diversity.

“We share a commitment to democracy, freedom, the rule of law and a rules-based international order that provides stability for both our peoples, and the region, to prosper.

“We will strive towards a stronger partnership which is defined by these common interests.”

President Joko Widodo said he conveyed to Mr Turnbull some of the key issues; firstly the removal of barriers to trade, tariffs and non-tariffs for Indonesian products like papers and palm oil.

Northern Territory Cattlemen's Association President Tom Stockwell of Sunday Creek Station in the NT said he’d not seen any official notification about the age limit increase for live cattle exports to Indonesia and other changes.

But he said increasing the 350kgs average weight limit on cattle exports to maximum 450kgs would allow for about another year of feeding before sale and provide more selling options, into the Indonesian market.

“The increase to a maximum of 450kgs is a very positive move,” he said.

“Under the old specifications, with a maximum weight limit of up to 350kgs, it could be hard to fit into a production system because the cattle could be too small one year and too big the next year.

“But this change will mean there will be a lot more cattle for sale into the Indonesia market.”

Mr Stockwell also welcomed the weekend announcement of a move to adopt annual import permits rather than quarterly or each trimester.

“The longer the permit time, the easier it is for people to manage the supply chain and the less chance there is of hold ups during the season,” he said.

“There always tends to be glitches in terms of exporting at the start of each quarter, like import permits not coming through, which causes hold ups in the supply chain, so having annual permits will mean people can plan ahead, with more surety.”

Cattle Council of Australia President Howard Smith said the weight limit increase would enhance producers’ flexibility on export options and “only strengthens the valuable Australian-Indonesian trade relationship”.

As part of the changes to the livestock trade terms between the two countries, feeder cattle up to 48 months can also now be shipped to Indonesia, up from a 30-month limit.

“This increase to feeder cattle average weight will be a boon to the northern cattle industry and essentially opens up a whole new market for producers,” he said.

“These changes bring more certainty and clarity for producers exporting to Indonesia and delivers benefits for the entire supply chain.

“The changes from the trimester cycle import permit system is an excellent example of a non-tariff barrier holding trade back – changing to the annual system will reduce the red tape for the industry.”

The Australian Sugar Industry Alliance said the announcement relating to the sugar tariff reduction would put Australian sugar exports on a par with our regional competitors.

Australian Sugar Industry Alliance Trade Committee Chair Paul Schembri said reducing the tariff to 5pc would make Australian sugar product more attractive to Indonesian food manufacturers and refiners and put it on par with regional competitors.

“We have been at a disadvantage since Thai exporters were granted a 5pc tariff in 2015 while our tariff stayed at effectively 8pc,” he said.

“Australia provided roughly one-third of all Indonesian sugar imports during 2014 and 2015 but that tariff preference meant Indonesia moved to source almost all of its raw sugar imports from Thailand.

“We lost about $500 million in trade opportunities at current prices.

“With the 5pc tariff agreement, we can again compete on our strengths – quality, reliability and year-round availability.”

Trade Minister Steve Ciobo said the advice on changes to live cattle exports would further strengthen bilateral relations between Indonesia and Australia, alongside the mutual benefits it delivers to both nations.

He said Australian agricultural exports to Indonesia were worth $3.1 billion in 2015-16 -including live cattle exports worth $578 million - making it the nation’s biggest market for feeder cattle.

“We have come a long way from the disastrous decision by Labor to ban live cattle to Indonesia in 2011 which blindsided the Australian cattle industry and undermined confidence in Australia as a reliable trading partner,” he said.

“By giving more certainty to the live export trade, today’s announcement lays the foundation for the value to continue to grow into the future.

“At the same time, Indonesia’s importers will be able to source a wider range of live feeder cattle, which should lead to more sustainable prices through the supply chain.”

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