The goal of the IA-CEPA is to create the framework for a new era of closer economic engagement between Australia and Indonesia and open new markets and opportunities for businesses, primary producers, service providers and investors. It will build on existing multilateral and regional agreements, including AANZFTA, and be as comprehensive as possible.
In a submission on behalf of the grains industry, GrainGrowers said that Indonesia is currently Australia’s largest export market for wheat, valued at A$1.3 billion per year. However, the trade is almost exclusively for flour milling purposes.
“The Indonesian government is currently not issuing import permits for feed grains, including feed wheat,” said Luke Mathews, manager of trade and economics for GrainGrowers. “We estimate the total underlying size of the Indonesian feed grain import market at 2 million to 3 million tonnes per annum, equating to a value A$550 to A$825 million (AUD free value).”
According to GrainGrowers, Indonesia’s growing livestock sector supports Australia’s exports of feed grains.
“This is a substantial potential market for Australia, larger than the current Australian-Indonesian live cattle trade, which is valued at roughly $540 million,” Mathews said. “In addition, Indonesia’s demand for feed grains is increasing at an estimated 1.1 million tonnes, or 7% per year, driven by a rapidly expanding livestock sector.”
Mathews noted that the Indonesian market would be “lucrative” due to its close proximity and it would complement Australia’s existing milling wheat trade with Indonesia.
“Furthermore, Indonesia’s current restrictions on feed grain imports has resulted in an increase in Indonesian feed grain prices,” Mathews said. “Artificially high Indonesian feed prices threaten the current expansion of the Indonesian stockfeed manufacturing and livestock production sectors. Resolution of this issue would provide win-win outcomes for both Indonesian livestock and Australian grain industries.”
Negotiations to achieve closer economic engagement between Australia and Indonesia through the IA-CEPA were re-started by Trade Ministers in March last year. Negotiators meet about every three months, with the latest negotiations occurring last week. The Department of Foreign Affairs and Trade asked for submissions from stakeholders on all aspects of trade with Indonesia in order to inform the agenda. GrainGrowers’ submission was prepared following extensive engagement with the wider grains industry.