Ag eagerly awaits Indonesia FTA

Ag eagerly awaits Indonesia FTA

Indonesia is a massive market for Australian agricultural produce.

Indonesia is a massive market for Australian agricultural produce.


UPDATED: A new FTA with Indonesia will have big benefits, in particular for the grains industry.


THE AUSTRALIAN agriculture sector is eagerly awaiting official confirmation that the Australia-Indonesia trade agreement which is expected to be inked at an international business conference in March.

Canberra was abuzz on Friday with news that official ratification of the trade deal was not far away.

Trade Minister Simon Birmingham said he had constructive dialogue with Indonesian ministers and he looked forward to finalising the agreement before March.

It is positive news for the ag sector after a string of delays to the deal going through, including when majority Muslim Indonesia reacted unfavourably to Scott Morrison's decision to move the Australian embassy in Israel from Tel Aviv to Jerusalem, which is disputed territory.

Negotiations on the deal were finalised in August. It was hoped it would be signed before Christmas and come into effect early this year.  

The Australian grains sector in particular is looking forward to the deal with Indonesia.

Our direct neighbour to the north is the largest buyer of Australian wheat and can account for up to 25 per cent of all Australian wheat exports in some seasons, with the wheat going into a range of baking applications.

With Indonesia's demand for baked goods made from wheaten flour rapidly increasing, the Australian grains industry is happy with prospects for growth in that space alone.

However, at present, Australia does not supply feed wheat to Indonesia.

That will all change once the FTA goes through.

Under the agreement, 500,000 tonnes of feed grain, made up of wheat, barley and sorghum, can be imported into Indonesida duty-free following the deal.

This equates to around $185 million in value for the Australian industry, based on a price of $400 a tonne should exporters be able to supply the whole quota.

It will be especially good news for Western Australian growers who lack the domestic feed wheat market available to the counterparts on the east coast in most years, although this year, due to the sky-high demand for feed grain from the east coast, grain is moving freely from west to east.

Grain Growers trade and economics manager Luke Mathews said the deal was a real positive for the grains sector.

"There are a lot of opportunities in Indonesia and this deal, opening up those feed grain markets, is a boost for Australian grain growers."

Having access to Indonesia's feed grain markets, duty free, will give Australia a key competitive advantage, to go with its favourable freight rates, into the Indonesian market compared with its major rivals, such as Canada and the US.

The grain will be used in Indonesia's livestock, poultry and aquaculture sectors.

Indonesia has a population of around 265 million, forecast to grow to 295 million by 2030.


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