Australian grains industry a big winner of Indonesia partnership

04 March, 2019

The Australian grains industry will be a big winner following the formal signing today of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), according to AEGIC.

AEGIC CEO Richard Simonaitis said the Australian grains industry can now look forward to new levels of collaboration with Indonesia – Australia’s single biggest wheat customer.

“I congratulate GrainGrowers Limited for working hard with the Australian Government to ensure grains are at the centre of the partnership,” he said.

“As Indonesia continues to grow, the IA-CEPA will provide significant and lasting benefits to our two countries in terms of value for Australian growers; and food security and quality for Indonesia.”

Mr Simonaitis said AEGIC looked forward to continuing to work with GrainGrowers and other industry partners on initiatives that will allow the grains and related industries in Australia and Indonesia to flourish even further.

Under the partnership, Australia will have access to the Indonesian feed grain market, with 500,000 tonnes tariff-free.

Mr Simonaitis said AEGIC had already been laying the groundwork to boost the value of Australian feed grains into Indonesia.

“Over the past 3 years we have been engaging feed grain nutrition experts to go into Indonesia and demonstrate to buyers the benefits of using Australian feed grains,” he said.

“This work, and the provisions of the new partnership, will give Australia a distinct advantage in capturing the rapidly growing Indonesian feed market.

“Indonesia’s total feed imports are currently valued at more than $1 billion, and the market is growing fast as people increasingly eat more meat.”

Mr Simonaitis said Indonesia had been a focus for AEGIC and the new partnership would strengthen this relationship.

“AEGIC is supporting Indonesian flour millers and processors through in-market education and technical support to help them get the most value out of Australian grains,” he said.

“On the Australian end, we provide our grains industry participants with wheat quality training at our Sydney Pilot Mill to increase their understanding of the wheat quality requirements of Indonesian customers.”

AEGIC is currently analysing future demand trends in the Indonesian market to help the Australian industry position itself to capture future opportunities. The second report in the series, focusing on the Indonesian noodle market, will be released soon.

Mr Simonaitis said AEGIC looked forward to supporting the IA-CEPA.

Indonesia fast facts

  • Indonesia is Australia’s single biggest wheat customer.
  • Each year Indonesia buys 4.2 mmt of Australian wheat worth $1.2 billion (average).
  • Indonesia’s population will jump more than 30 million in little over a decade.
  • Indonesians are becoming wealthier. Per capita GDP has grown from $780 in the early 2000s to more than $3800 in 2017.
  • The Indonesian middle class has grown from 2 million in 2004 to 120 million in 2020 and is becoming highly urbanised.
  • These changes are resulting in diets evolving to incorporate more wheat and meat products and less rice.

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