Indonesia’s demand for food is expected to quadruple by 2050, and Australian imports could help to fill the gap.
- The pandemic means 10 per cent of Indonesia’s population is classed as poor
- ABARES says increased food imports could help reverse the trend
- Once Indonesia’s health crisis subsides, a growing middle class is expected to demand more imported food
Australian Bureau of Agricultural and Resource Economics (ABARES) executive director Jared Greenville says growth prospects for Indonesia’s food market are enormous.
“We expect food demand to quadruple by 2050 based on rapid growth in the country’s demand for more diverse and higher-value foods such as meat, dairy, fruit and vegetables,” he said.
According to a new paper produced by ABARES, Indonesia’s trade policies, since 2012 in particular, have contributed to many Indonesians being poor and hungry.
“The historical focus on self-sufficiency has had a high economic and social cost, particularly through higher food prices,” it said.
COVID-19 restrictions, meanwhile, have pushed an extra 1.1 million Indonesians into poverty, according to the World Bank.
It says the pandemic has pushed poverty-reduction progress in Indonesia back three years and that 27.5 million Indonesians – 10 per cent of the population – are now classified as poor.
Foreign investment could make food cheaper
ABARES suggests that allowing more foreign investment could decrease Indonesian food prices and improve quality.
It also predicts that once Indonesia’s health crisis subsides, its growing and increasingly urbanised middle class will pressure policy makers to allow more imported food into the country.
Dr Greenville said those products could include cold-climate Australian fruit.
“Red meat is another one where there’s a large opportunity,” he said.
Middle class will demand more imports
ABARES said it was likely that about three quarters of the value of food-consumption growth in Indonesia would come from imported products by 2050.
Dr Greenville acknowledged many Australian farmers – particularly beef producers – may be frustrated by failed attempts to sell into the Indonesian market.
But he said persistence was the key.
“Australia does have a long relationship with Indonesia, being one of our closest neighbours … there have been frustrations in the trade and it’s a fairly complex regulatory environment in Indonesia to engage with,” he said.
“But I think the incremental and the long-term story really points to the value of persisting at closer market ties.
Emerging opportunities in transition to ‘green economy’
Australia Indonesia Business Council (AIBC) president Jennifer Mathews welcomed the ABARES report.
“Australia’s reputation as a reliable supplier of clean, safe and high-quality food and its existing agricultural trade relationship provide an excellent platform to increase supply to meet Indonesia’s growing demand for premium agri-food products,” she said.
“In entering the Indonesian market, however, it’s important that Australian producers take time to understand Indonesia’s priorities around productivity and self-sufficiency, and conduct due diligence into the policy and regulatory environment.”
“AIBC sees emerging opportunities for Australian industry to partner with Indonesia in making the transition to a green economy – including in the decarbonisation of the agricultural sector and in building sustainable supply chains.”
“In order to realise the full potential of this partnership, it will be important for Indonesia to continue with the implementation of relevant regulatory and policy reforms.”