Indonesia’s need for food safety and security is a big opportunity for NZ firms

By Brierley Penn

Food quality and security is becoming an increasing priority for Indonesia’s rapidly expanding middle class. This provides great potential for New Zealand firms to meet the growing demand in this market, particularly if they are able to differentiate themselves through the integrity of their products. It also creates a further opportunity to move up the value chain – particularly for the NZ food and beverage industry.

New Zealand firms are traditionally renowned for the security of their food products, and are particularly efficient in the industry areas which the Indonesian government views as growth priorities.  Indonesia’s consumption of protein is predicted to rise substantially over the coming year. Indonesian Trade Minister, Gita Wirjawan has cited a goal of increasing Indonesian beef consumption from around two kilograms per capita each year to around 20 kilograms. Developing nations aspire to higher levels of health and nutrition, and increase their demand for high quality dairy products in line with this aspiration.

This demand, according to industry leaders at the Indonesian Forum , can be met through an increase in both domestic supply, but also through further imports of dairy and beef imports. In his address, the Prime Minister emphasized that imports from New Zealand would always be complementary to, rather than competitive with, domestic production. “Even if all New Zealand were turned into farmland, we could only supply a small fraction of the rapidly expanding demand from markets in East Asia and Southeast Asia.”

In light of this, Prime Minister Key urged Indonesia, along with its neighbouring ASEAN nations, to maintain open markets, and encouraged the further abolition of any constraints which exist to international trade and imports. Sir Graeme Harrison also drew attention to the fact that the production cycle of beef is very long, which means that it can be very difficult for Indonesian farmers, who often have extremely small herds, to sustainably and efficiently operate to meet the growing demand of the nation.

New Zealand can offer both the technological knowledge and expertise which can be shared with Indonesia to aid in its development, such as capacity-building activities in dairy, beef, horticulture and quarantine, but also assist in meeting the growing physical demand for these products on the ground.

It is certainly encouraging to see companies such as Fonterra stepping up their engagement with business in Indonesia, with over 200 staff and 38 distribution partners now operating in the country. Fonterra’s Peter Moore emphasized the integrated downstream nature of the business, which allowed the company’s involvement in the country to be complementary to domestic production. The Indonesian government must recognize these facts, and look to further reduce existing restrictions on trade in these key industries.

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