Hartsuyker: Indonesian farm export opportunities “massive”

By Colin Bettles

Published on 18 March 2017, on farmonline.com.au

BEEF, grains and horticulture supply were the main items of discussion served-up during high level farm industry talks on Luke Hartsuyker’s recent visit to Indonesia.

The NSW Nationals MP and Assistant Minister to the Deputy Prime Minister Barnaby Joyce spent five days in the large and growing northern export market last week, coinciding with Australia and Indonesia Business Week activities.

His beef agenda included touring the Juang Jaya Abdi Alam (JJAA) feedlot in Bandar Lampung in Sumatra that’s 80 per cent owned by the Consolidated Pastoral Company (CPC) and 20pc by its Indonesian joint-venture partners.

Mr Hartsuyker observed Australian beef products being sold at a traditional Indonesian wet market and toured abattoir facilities and a small beef cattle farm, accompanied by industry representatives from both ends of the large food supply chain.

Australian industry figures who attended a beef round-table included; CPC CEO Troy Setter; Australian Livestock Exporters’ Council CEO Simon Westaway; NT Livestock Exporters Association CEO Stuart Kemp; and NT Cattlemen’s Association CEO Tracey Hayes.

The $60 million Indonesia–Australia Partnership on Food Security in the Red Meat and Cattle Sector was a core focus of the trade talks as were the attitude of industry towards recent changes to Australian cattle import arrangements, resulting from an announcement made last month after a meeting between Indonesian President Joko Widodo and Australian Prime Minister Malcolm Turnbull.

Indonesia has increased the age limit of live feeder cattle eligible for import, along with the weight limit moving from 350 kilograms average weight to a maximum 450kgs and has also increased import permit time-frames, out to 12-months.

Mr Hartsuyker said the announcements by Mr Turnbull and President Widodo had created “a very, very significant enhancement for the trade”.

“The move to 12-month permits is welcomed and the increased flexibility offered by the age and weight limit changes means we’ll have greater certainty of supply for Indonesian consumers and greater certainty for our exporters; taking a lot of the risk away and allowing greater planning opportunities,” he said.

“Discussions (in Indonesia) hit very much around the complementary nature of the Australian and Indonesian agriculture industries and the desire by Indonesia to have secure sources of clean and green food and in particular protein.

“The enhanced stability that those changes can bring to the market was something that was welcomed on both sides.”

Mr Hartsuyker said from an Indonesian government perspective, security of supply was a “very important factor” in the farm-trade relationship.

“With a population of 255 million people, food security is very important to the Indonesian government and the changes that were announced certainly makes it easier for consistent supply to be achieved,” he said.

“And the more consistent the supply, the less the market fluctuates.”

Mr Hartsuyker also held talks with the Chair of Indonesia’s Commission 4 Edhy Prabowo bringing into focus beef supply issues and the red meat partnership.

He said the beef roundtable also addressed concerns about a recent move to allow the importation of Indian buffalo meat and its impact on the local market.

“Australia as a nation competes in a range of markets and competition will come and go,” he said.

“There was a fair bit of activity in Indonesia with regards to the import of that buffalo and it was the subject of significant discussion.

“But domestically they are very eager to increase their local beef production.”

In March 2016, a new regulation came into effect allowing the import of live beef and buffalo meat from countries with zonal freedom from Foot and Mouth Disease (FMD) or countries with an approved FMD eradication program, as recognised by the OIE.

The first Indian buffalo meat was imported to Indonesia in September 2016, with imports expected to hit at around 70,000 tonnes per year.

Currently about 30,000 tonnes of buffalo meat has been imported to Indonesia from India, since August 2016.

At a roundtable meeting of horticultural industries Mr Hartsuyker said the Indonesians made it “very clear” they were looking to source high quality product from Australia but had some issues with variability of quality for some fruit products.

“The key message was that Australia is clearly a player at the premium end of the market,” he said.

Mr Hartsuyker also visited the Bogasari flour mill which is Australia’s biggest grain customer in Indonesia and the world’s second largest mill and again, grain quality was a core focus of industry talks.

“Basically the feedback we received at the grains roundtable is that the Indonesians are very happy with the quality of grain they receive and they’re also happy with the time that it takes to ship grain from Australia to Indonesia, as compared to our competitors,” he said.

“We have a significant quality advantage and timing advantage and that time of shipping certainly makes a significant difference with the cost of holding and the transport costs where it’s a much longer journey compared to our competitors and that places Australia in a much more favourable light.

“We didn’t discuss in any detail the future demand prospects but certainly we face competition from around the world and to this point, Australia is a very effective competitor.

“Australian exporters are competing in a world market and as Australian exporters of agricultural product we take on all comers and we’ll back our product for its quality every time – it’s in great demand – and the Indonesians are very pragmatic about it.”

Mr Hartsuyker said his overall impression was that the agricultural export opportunities to Indonesia were “massive” to due to a growing population and middle class consumer base.

“Indonesia has a young population with a young average age so from a productivity perspective you’re looking at a market that’s going to grow and is not facing the demographic challenges faced by many other countries,” he said.

“They essentially have a very young population and that provides some exciting prospects and very, very keen consumers so it’s great news for Australia.

“Our agricultural industries complement each other so I think it’s an exciting market for Australia.

“Everybody is looking forward to the future and greater levels of cooperation and ways we can assist Indonesia with its goal of boosting local production through things like the Red Meat and Cattle Partnership and the breeding and skills development program that’s being funded under that program.

“It’s a $60m investment by Australia into Indonesia and it builds on our relationship, to make it more than just a buyer and seller relationship.”

Mr Hartsuyker also participated in a number of promotional activities in retail outlets and through media exposure, promoting Australian agricultural products, like beef and dairy.

“Indonesia is one of Australia’s closest neighbours and our sixth-largest agricultural export market, with two-way agricultural trade valued at almost $4 billion in 2015–16,” he said.