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Indonesian talks could herald new era of trade growth

4 November 2010

A NEW Comprehensive Economic Partnership Agreement with our nearest economic powerhouse, Indonesia, announced by Prime Minister Julia Gillard, offers real opportunities to free up trade between both countries, according to the National Farmers’ Federation (NFF).

“Australian farmers already enjoy a strong bilateral agricultural relationship with Indonesia, but the growth potential in this burgeoning market could exponentially expand our existing trade base worth $1.74 billion a year,” NFF President David Crombie said.

Indonesian market snapshot for Australia’s major farm exports:

  • Beef – Australia’s largest single live cattle export market, around 766,000 head each year, is worth $748 million, while boxed beef into Indonesia totals $178 million.
  • Wheat – our largest export destination is worth $594 million a year.
  • Cotton – our second largest export market is worth $151 million a year.
  • Dairy ($132 million) and horticulture ($41.3 million) – both are emerging as big growth commodities in the Indonesian market.

“With a population of 231 million and ever-growing, expanding our trade relations with Indonesia makes sense, but it also makes sense for the Indonesians,” Mr Crombie explained. “It’s a complementary market for Australian agriculture, meaning we’re not in direct competition for goods.

“In fact, a lot of value adding is done on agri exports, such as live cattle feedlotting and processing, cotton inputs to the Indonesia textiles industry, and processing of wheat into high value flour and other processed goods.

“The close proximity of Indonesia means the free flow of trade between our two nations makes a lot of sense, and Australian agriculture has built a proven track record of working closely with our Indonesian counterparts to ensure that this trade delivers genuine economic benefits to both countries.

“Unlike many of our trading partners, where high tariff walls are the main impediments to trade, in Indonesia ‘behind the border’ regulatory issues are our biggest barriers that need to be addressed.

“A Comprehensive Economic Partnership Agreement may be the perfect means to overcome these hurdles and see complementary economic benefits flow between both countries.”

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