Australia, Indonesia agree on stronger ties in grains sector

Singapore — Australia and Indonesia concluded negotiations for the Indonesia-Australia Comprehensive Economic Partnership Agreement or IA-CEPA on Friday, which will allow Australian farmers to export 500,000 mt/year of tariff-free feed grains to Indonesia.

Under the new agreement, Australia will gain access to the Indonesian feed grain market, with the ability to export duty-free feed barley, feed wheat and sorghum. Currently, Australia’s grain trade to Indonesia is solely wheat for milling purposes.

“This is a significant boost for the Australian wheat industry, building on our substantial milling wheat exports,” Australia’s Ministry for Trade, Tourism and Investment said in a statement.

Indonesia is Australia’s largest wheat trading partner, with Australia accounting for approximately 28% of the wheat supplied to Indonesia over July 2017-March 2018, according to US Department of Agriculture data.

Australia’s leading market share is attributed to the Indonesian noodle industry’s preference for Australian milling wheat and the countries’ proximity to each other.

However, Australia has been facing increasing competition from relatively cheaper wheat origins, such as Ukrainian wheat, moving to Indonesia.

Commercial poultry feed consumption in Indonesia is expected to grow more than 5% year on year to 18.4 million mt in 2017/18, according to the USDA.