Australian farmers welcome trade deal with Indonesia

Australia and Indonesia have finalised an agreement that will create closer economic engagement and new opportunities for businesses in both countries. The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) has received widespread industry support, including backing from AUSVEG.

“Under this agreement, over 99% of Australian goods exported to Indonesia will either be duty-free or enter under significantly improved preferential arrangements by 2020,” said Minister for Industry, Science and Technology, Karen Andrews. “It’s a win-win outcome — with Australia also providing Indonesia with improved arrangements that will allow Australian producers easier access to Indonesian goods.”

Indonesia is a growing market for Australian goods and services exporters, with total two-way trade worth $16.4 billion in 2017.

Australian vegetable exports to Indonesia were valued at $3.7 million in the 2017/18 financial year, and potatoes accounted for nearly half of this total. The IA-CEPA is expected to help Australian growers boost their carrot and potato exports.

AUSVEG CEO James Whiteside said, “In particular, the agreement to increase import quotas and decrease tariffs for carrot and potato exports — two of the Australian vegetable industry’s key export crops — should lead to an immediate increase in the trade of these commodities to Indonesia, a potentially lucrative market for our growers.

“The finalisation of this important deal is timely, given the industry’s increased activities in market development, which included Indonesia’s participation in the recent annual AUSVEG Reverse Trade Mission that allowed buyers from key export markets to visit Australian vegetable growers and see first-hand the high-quality produce for which our growers are renowned around the world.”

It will help the vegetable industry reach its goal of increasing its export value to $315 million per year by 2020, a 40% increase from 2016.

“Trade agreements with neighbouring countries such as the IA-CEPA helps provide our industry with confidence that it can continue to prosper through developing export markets, which helps secure the profitability and competitiveness of the Australian vegetable industry,” said Whiteside.

A joint media release from Prime Minister Scott Morrison and Minister for Trade, Tourism and Investment Simon Birmingham explained further benefits of this agreement for farmers.

“A renewed economic partnership with Indonesia is particularly a major boost for Australian farmers with the grains, live cattle, dairy and horticulture sectors to benefit from greater certainty of access and lower tariffs. As a result, Australian farmers will be able to export 500,000 tonnes of feed grains such as wheat into Indonesia tariff-free. This is a significant boost for the Australian wheat industry, building on our substantial milling wheat exports.”

Fiona Simson, President of the National Farmers’ Federation, said IA-CEPA locks in important new trade opportunities for Australian goods producers, and it will help the agriculture industry reach its production value target of $100 billion by 2030.

Australian Dairy Industry Council’s President Terry Richardson explained that Indonesia is Australia’s third-largest dairy export market on value terms and its demand for dairy is set to continue with its increasingly affluent population of 260 million. “As Australia’s nearest neighbour with strong existing ties with our dairy industry, the conclusion of IA-CEPA will enhance the naturally emerging opportunities that are presenting themselves in that key market.”

For more information on the key outcomes, click here.

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