Beef, grains, dairy, sugar, fruit, vegetable and honey farmers are cheering after the signing of the Indonesia-Australia trade deal in Jakarta this week.
Signing of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) puts the finish line in sight after eight years of back and forth negotiations between the two nations.
Although there are still hurdles to be crossed, this free trade agreement will strengthen an already thriving relationship by improving market access and reducing tariffs.
“Indonesia is the world’s biggest importer of Australian wheat and Australia is Indonesia’s largest supplier of red meat. Australian dairy products and sugar are also highly valued by our neighbour,” National Farmers’ Federation CEO Tony Mahar said.
Cattle producers are one of the biggest winners under the deal, which will see the quota for duty free live male cattle rise to 575,000 head per year, then grow at 4 per cent per year to 700,000.
“Beef is the cornerstone of Australia’s trade relationship with Indonesia. Live cattle exports and the growing boxed beef trade has secured Australia’s place as Indonesia’s largest supplier of red meat,” Cattle Council of Australia CEO Margo Andrae said.
“This agreement is a win for cattle producing families and rural communities in Australia and the tens of thousands of Indonesians who work with Australian cattle and beef at the import end of the supply chain.”
Australia is also now the only country with formal access to Indonesia’s feed grain market with an annual trade volume reaching 4.2 million tonnes, valued at $1.3 billion.
“Previously, Australia’s existing trade with Indonesia has been almost exclusively wheat for milling purposes,” GrainGrowers General Manager for Policy & Research Luke Matthews said.
“Under this trade agreement, Australian farmers will now be able to access the rapidly growing Indonesian feed grain market, providing new opportunities for Australian feed wheat, barley and sorghum.”
Two of Australia’s key vegetable exports, the carrot and potato industries, were also the main beneficiaries from the IA-CEPA.
The agreement should lead to an immediate increase in the trade of these commodities to Indonesia.AUSVEG CEO James Whiteside.
“Given Indonesia is predicted to have the world’s fifth largest economy by 2030, the IA-CEPA will help ensure that Australia, and its horticulture producers, will be able to benefit from the country’s expected economic growth.”
With the details of the deal in place it’s now up to the Australian Parliament to ensure the landmark trade agreement is ratified.
“It’s a matter of significant national importance that free trade agreements, like the IA-CEPA, enjoy bipartisan support and passage through both House,” Mr Mahar said.
In the face of drought and floods, it’s vital that the future interests of farmers are not compromised by short-term partisan politics.NFF CEO Tony Mahar.
“A stronger agricultural sector means more jobs, more jobs means more sustainable, more vibrant regional communities and an overall stronger national economy.”
Agriculture wins in IA-CEPA
Tariff cut immediately to 10 per cent (from 25 per cent) for 5,000 tonnes per year; tariff further reduced over time, down to zero per cent after 15 years for an unlimited volume.
Mandarins: tariff cut immediately 10% (from 25%) for 7,500 tonnes per year; tariff further reduced over time, down to 0% after 20 years for an unlimited volume.
Oranges: duty free access for 10,000 tonnes of oranges per year, increasing 5% each year.
Lemons and limes: duty free access for 5,000 tonnes of lemons and limes per year, increasing 2.5% each year.
Immediate elimination of 5% tariff for Milk and cream, concentrated or containing added sugar or other sweetening matter. Immediate elimination of 5% tariff for Grated or powdered cheese, of all kinds.
Remaining tariffs on all Australian exports of frozen beef and sheepmeat into Indonesia reduced to 2.5% immediately, and eliminated after 5 years.
Guaranteed duty free access for 500,000 tonnes of feed grains per year (wheat, barley, sorghum), increasing at 5% per year. This builds on current exports of Australian wheat to Indonesia, one of our most important wheat markets.
Elimination of 5% tariff on Australian honey after 15 years.
Duty free access for 575,000 head of live male cattle per year, growing at 4% per year to 700,000. A review mechanism in year 6 will consider subsequent increases.
Confirmation of the early outcome in 2017, reducing the tariff on Australian sugar to 5% (from 8-12%).
Tariff cut immediately to 10% (from 25%) for 10,000 tonnes per year; after five years tariff further reduced to 5% for 12,500 tonnes per year, increasing by 2.5% per year.