Grain industry lobby group, GrainGrowers, has been quick to lead the farm industry in congratulating the federal government for concluding the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).
Prime Minister Scott Morrison inked the landmark trade deal with one of Australia’s most important trading partners in the Presidential Palace in Bogor tonight.
The IA-CEPA has been a goal of successive Australian governments.
Indonesia is a country of boundless opportunity for the Australian grains industry
Indonesia ranks as our fifth largest ag export market and is our 13th largest trading partner overall.
“Indonesia is a country of boundless opportunity for the Australian grains industry,” said GrainGrowers chief executive officer, David McKeon.
“A country with 263 million people, it is forecast to grow to 295m by 2030.
It is already Australia’s largest wheat market, valued at roughly $1.3 billion with trade volumes around 4.2m tonnes a year.
“Wheat is already Australia’s single largest export to Indonesia, which will become the world’s third largest economy by 2050.”
Mr McKeon said while Australia’s grain trade to Indonesia was almost exclusively wheat for milling purposes, the IA-CEPA would directly allow more diversity and growth in the future.
Feed wheat opportunities
Australia would now have priority access to the rapidly growing Indonesian feed grain market thanks to a new 500,000t duty-free tariff rate quota for Australian feed grains, including feed barley, sorghum and feed wheat.
“This will provide distinct advantages to Australian grain farmers over rival grain exporting countries,” he said.
“These new opportunities for Australian feed grains will also help boost development of Indonesia’s livestock, poultry and aquaculture industries, while complementing the existing strong trade in milling wheat between the two countries."
“GrainGrowers is equally pleased that Indonesia and Australia will start to work on a grains-specific economic cooperation initiative, dubbed the Indonesia-Australia Strategic Grains Partnership.
The partnership will provide the required technical, economic, and social programs to allow the grains and related industries in both countries to flourish.”
Total trade between the two countries is worth $16b a year with Indonesia buying more than $2.4b in agricultural commodities such as wheat, livestock, meat, sugar and cotton.
Deal sweetener last year
Indonesia paved the way to a comprehensive agreement last year when it cut sugar tariffs for Australian imports by three per cent in exchange for eliminating import duties on Indonesian herbicides and pesticides.
The near neighbour’s rising middle class is also a prime target for high-value Australian produce.
The trade deal was set to be signed early this week but was delayed by last week’s Canberra leadership spill.
Mr McKeon said GrainGrowers, on behalf of Australian grain farmers and the broader industry, had been working hard with the Australian Government to ensure grain was central to the trade agreement.
“We are thrilled with the outcome and the benefits this new trade agreement will provide to Australian grain growers and the broader industry," Mr McKeon said.
“IA-CEPA will provide a platform for further growth in milling wheat trade, and will allow for improved diversity in grains trade between the two countries.
“IA-CEPA will not only boost opportunities for the Australian grain industry, but will also support growth, development and trade opportunities for Indonesia’s food manufacturing, stockfeed and livestock sectors.”
Still to be ratified
GrainGrowers' trade and economics manager, Luke Mathews, acknowledged the efforts by the government in pursuing a high quality agreement with Indonesia.
However, he noted the official signing of the agreement and subsequent ratification by both countries was still to come and hoped it would happen soon.
The IA-CEPA would cement the existing relationship between Australian and Indonesian milling wheat industries while allowing new trade, investment and relationships to flourish between Australia’s grain industry and Indonesia’s food manufacturing, stockfeed and livestock sectors.
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