Indonesian Trade – Dairy

Australian and New Zealand agriculture and food exporters need to increase their leverage of competitive advantage if they intend to strengthen trade with Indonesia. The challenge was getting closer to the customer and building a relationship in order to deliver new innovative, value-added products which capture the eve changing needs of the market.

‘Indonesia has a strong agriculture sector but natural resources have been drawn to more lucrative export crops, reducing their ability to produce all the staple food and feed required domestically’ Rabobank’s report said.

The combination of Australian and NZ food and agricultural trade with Indonesia exceeds US$2.6 billion. Of this, Australia accounts for over 80%.

In 2012 Indonesia imported dairy products equating to about 3 billion litres of milk. Over the past decade the trade volumes have almost doubled and Rabobank expects Indonesian dairy consumption to grow by around 5% each year.

‘The Indonesian government has a strategic goal to increase self-sufficiency rates, which will be supported through private investment,’ the report said.

‘However, keeping pace with consumption growth will prove difficult, and, as a result, Indonesia will need to fill the gap with imported dairy products. Hence there is scope for Australia and NZ to build on existing dairy trade flows.’

‘Australia has a particularly good opportunity to grow its exports of value-add ingredients and fresh dairy products into Indonesia given the reduced shipping times. However, in the face of increased competition, Australia and NZ will need to leverage their proximity to market and a proven food quality track record to strengthen their position as suppliers of choice.’

While battling reduced milk volumes, Australia’s export share has fallen back to around 12% from peaks of 20% achieved in 2001. The outlook is positive though, with Australia and Indonesia’s partnership growing.

Reference: Lloyd’s List Australia, issue Feb13, 2014, Article by Cameron Boggs – Australia, NZ making most of openings in Indonesian trade.

Rabobank Report – Agriculture in focus – Indonesia – islands of opportunity

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