WASHINGTON, D.C., U.S. — Both Australia and Indonesia have ratified a bilateral free trade agreement that will provide preferential access for more than 99% of Australia’s ag goods imported by Indonesia, according to a Global Agricultural Information Network report from the U.S. Department of Agriculture (USDA).
The Indonesia-Australian Comprehensive Economic Partnership Agreement (IA-CEPA) creates a framework for the two countries to unlock a bilateral economic partnership, fostering economic cooperation between businesses, communities and individuals.
According to Australia’s department of foreign affairs and trade, Indonesia is a growing market for Australian goods and services exporters. In 2018-19, total two-way trade in goods and services with Indonesia was worth A$17.8 billion, making Indonesia Australia’s 13th largest trading partner.
Indonesia was Australia’s fifth largest export market for agricultural products in 2019 after China, Japan, the United States and South Korea. Australia’s agricultural exports are typically between A$2 billion to A$2.5 billion but have fallen the last two years as severe drought in Australia and strong competition from other suppliers have reduced Australia’s wheat shipments to Indonesia, the USDA report said.
As part of the agreement Indonesia will guarantee access for feed grains to complement the trade in grains for human consumption:
- Guaranteed access into the Indonesian market for 500,000 tonnes of feed grains (wheat, sorghum, barley) each year, increasing 5% per year
- Elimination of outstanding tariffs not eliminated under ASEAN-Australia-New Zealand FTA on most remaining cereals and grains
- Elimination of 5% tariff on rolled outs
- Elimination of 5% on unroasted malts
The agreement was supported by GrainGrowers, an Australian-based grain representative organization, hoping it will help grain farmers capitalize on this new market in 2020.
“We would like to sincerely thank the Australian government for the significant efforts directed toward this really positive outcome for grain farmers,” said Brett Hosking, chairman of GrainGrowers. “In a period of global economic uncertainty, it is encouraging to see the Australian government take positive steps in shoring up trade opportunities. We hope that growers across the country will be able to take advantage of the opportunities IA-CEPA brings.”
Another component of IA-CEPA is the development of a grains-specific economic cooperation initiative, the Australia-Indonesia Grains Partnership. The partnership will ensure Indonesian stockfeed and livestock industries have the right technical support when using Australian feed grains such as barley, maximizing productivity for the sector.
“We look forward to working with the Australian government to ensure the partnership is appropriately funded and effectively implemented as quickly as possible,” Hosking said. “This agreement is critical for our farming businesses. We are looking forward to working with our Indonesian colleagues and gratefully acknowledge the contributions of many organizations whose hard work has brought about the successful ratification of IA-CEPA.”
GrainGrowers is an Australian-based grain representative organization that includes 17,000 grower members across Australia. Goal of the organization is to build a better more efficient, sustainable and profitable Australian grain sector.