The national commodity forecaster is tipping Indonesia’s agrifood imports to increase 20-fold by 2050, to be worth US$150 billion.
That represents a significant opportunity for Australian exporters, who already send large amounts of wheat, live cattle, sugar and other products to Indonesia each year.
But booming demand for high-protein, high-quality food for an increasingly urbanised and wealthy Indonesian population will also mean stiff competition for Australia in that market.
Chief commodity analyst Jammie Penm said ABARES’ What Indonesia wants report shows the biggest opportunities are likely to come for meat, dairy and fruit and vegetable exporters.
“In the case of Indonesia, the current consumption level per person is relatively low. But with income growth, for the future we expect that demand will increase quote significantly over the period to 2050,” he said.
“With urbanisation, with income growth, we will expect demand for high-quality beef will increase quite significantly, and also there will be more diverse dietary habits; changing perhaps from rice-based products to wheat-based products, from rice and staple foods to more protein-based foods.”
While ABARES is tipping Indonesia’s own food production to double in value (from 2009 US dollars) by 2050, to US$152 billion, imports are still expected to play a vital role.
In 2014, half of Indonesia’s imported wheat came from Australia, representing 20 per cent of Australia’s total wheat exports. Indonesia is Australia’s largest export market for wheat.
Jammie Penm says other countries will be keen to cash in as Indonesia’s appetite for wheat grows.
Grain producers can’t be complacent
GrainGrowers trade and market access manager Cheryl Kalisch Gordon warns that Australia alone can’t hope to meet Indonesian demand for wheat, which is increasing “in the order of 10 per cent per annum” when Australian productivity is only improving at around 2 per cent per year.
She said the grains industry can’t afford to be complacent.
“We need to not take this very important market for granted, we actually need to make strategic efforts in that market,” Dr Kalisch Gordon said.
“GrainGrowers is certainly supportive of pushing some initiatives over the next little while that will actually shore up and show respect for that trade, but also provide an education source into Indonesia as to how to best use, to best store, and to best mill Australian grain.”
While Australia appears to have the geographical advantage over the major wheat exporting regions of North America and the Black Sea, Dr Kalisch Gordon says that’s not necessarily the case.
“What we need to be really in tune with is ensuring we maintain our position as a high-quality provider of wheat,” she said.
“You’re going to be getting a lot more product coming out of the Black Sea [to Indonesia in future], particularly when freight rates are low as they have been in recent times. Depending on seasons, you’re also going to see wheat coming out of India; that’s the lower quality grade of wheat.
“At the higher quality level, you’re going to see strong competition – against especially when freight rates are low – from Canada and the US.
“For a lot of importers, having ‘just in time’ imports into Indonesia is important and we can do that.
“So we need to work on our advantages, which can be things like ‘just in time’ delivery, but maintaining the quality perception and understanding in the market, which means we need to help Indonesian buyers understand our grain more, and how to use it.
“The Canadians and the US are ahead of Australia in terms of educating buyers on their grain,” Dr Kalisch Gordon said.