In November 2011, I travelled to Indonesia with my business partners from AsiaAustralis on a multi focal trip. We had been invited to take part in the East Asian Forum as Business Guests, and as part of this trip we attended other business events such as the Indonesia Australia Business Council National Conference and the Australia Business Asia Conference. The other focus points for AsiaAustralis were to gauge interest and demand for Australian products in the Indonesian market. Despite the multi focal approach, we were encouraged by the overwhelming interest in Australian food produce. There was clearly substantial demand in the Indonesian market for premium priced Australian food products. The key issue here is to help this clear demand for Australian product translate into business and trade matching with Australian suppliers.
At both the East Asian Summit and the Indonesian Australian Business Council events, government trade ministers such as Dr. Craig Emerson (Australia) and Pak. Gita Wirjawan (Indonesia) discussed the clear and present issues of food security facing Indonesia. Food security in Indonesia is not just a case of maintaining domestic ownership of farming land, but indeed practically feeding the growing Indonesian Population approaching 250 million people. The food security issue in Indonesia ties in with poverty reduction and economic growth. Indonesia is a country of enormous potential and alleviating poverty amongst the urban and rural poor in Indonesia is critical to Indonesia’s economic, political and security stability.
This demand for food and meeting the food security challenge in Indonesia creates an opportunity for Australian agricultural companies and food producers to jump into the breach. Food security at the low-end of the Indonesia translates into rice and noodles. Indonesia has in the last couple of years opened their market to imported Rice which has had a positive effect on the price of rice and helped feed 10s of millions of people living in poverty. Indonesia also has a hunger for noodles, and Australian grain and flour are helping feed this same impoverished population. Indonesia is increasingly becoming a country of noodle eaters and Australia is perfectly positioned to help provide the flour needed to produce noodles that Indonesian’s like to eat. Flour for noodles requires different mixes to ensure bonding is successful, and to keep the cost low to help meet the food security and market needs. Australian grain and flour producers have ample scope to increase their involvement in this Indonesian market.
The emerging middle class in Indonesia which has been identified at representing between 80-130 million people (according to World Bank definition of middle class), has seen increasing demand for more diverse food choices than solely rice and noodles. This is reflected in the growth in high-end restaurants from North America and Europe, not to mention China and Japan. There is also a developing demand for fresh bread and baked products such as bread and pastries. As the middle class in Indonesia expands, so does the demand for premium high quality food. Australia here too is filling the breach, with the often discussed live cattle trade, which helps local farmers participate in the wealth generated from the growing demand in meat. Similarly there is demand for high quality boxed beef and lamb, which is the pre-slaughtered high quality meats Southern Australian Farmers are great at producing. Restaurants in Jakarta emphasize the ‘Australian Beef’ on their menus as a stamp of quality.
The demand for Australian food products is substantial and we should be jumping at the opportunity. Unfortunately we often only hear of the bad news stories associated with Indonesia. Australian farmers, Australian politicians and Australian government bureaucrats need to reassess the opportunities in the Indonesian market. Our closest northern neighbour has enormous market potential for Australian food producers and there is an opportunity for Australia to help Indonesia meet its food security needs, while at the same time building strong business and community partnerships for the future.
If your company is looking to tap into the increasing demand for food in the Indonesian market, please feel free to send me an email (email@example.com), and we can have a chat about how AsiaAustralis can assist your company meet the needs of the Indonesian market.