Indonesia's Push for Dairy Self-Sufficiency Threatens $1B Trade with New Import Conditions
Source: DairyNews.today
Indonesia's latest push for food self-sufficiency is threatening to disrupt the country’s dairy trade, which is valued at nearly $1 billion annually. Indonesian President Prabowo Subianto's administration is now demanding the importation of live dairy cows as a condition for allowing dairy product imports into the country.
This move could affect dairy exports to Indonesia, a key market for New Zealand, which has seen its dairy exports to the Southeast Asian nation nearly triple fr om $385 million in 2016 to $996 million last year. President Subianto’s drive for self-sufficiency follows a campaign promise made earlier this year to provide free meals to 80 million schoolchildren, aiming to boost dairy consumption and improve child health in a country wh ere only 16% of dairy products are sourced domestically.
The new condition, which has been communicated verbally, stipulates that importers will need to source live dairy cattle in order to obtain permits for dairy product imports. While the policy has not yet been officially confirmed, it could be formalized as early as next week when permits for dairy imports in January and February are issued.
Insiders say the move could catch New Zealand exporters off guard. "Importers would be like, ‘What are we going to do with these cows? We’ve got nowhere to put them, and we certainly don’t know how to milk them,’" one source commented.
Kimberly Crewther, executive director of the Dairy Companies Association of New Zealand (DCANZ), said exporters are awaiting further clarification on the matter. "We have not seen an official policy linking dairy product import permits to cow imports, but we are aware this has been discussed," she said.
Crewther expressed concern that the new condition could disrupt a rapidly growing market, noting the significant increase in exports to Indonesia in recent years. "We look for trade in dairy products to be as frictionless as possible and in line with agreed provisions," she added. These provisions were outlined under World Trade Organization (WTO) rules and New Zealand's 2010 free trade agreement with ASEAN countries, including Indonesia.
Subianto’s goal of raising per capita dairy consumption fr om 16.27 kg to 26 kg, aligning it with neighboring countries like Thailand and Vietnam, could be undermined by this policy. The president also aims to expand the domestic dairy herd from 260,000 to 1.5 million over the next decade, but it remains uncertain how this target will be met.
Historically, Indonesia’s self-sufficiency policies have disrupted trade with New Zealand. In the early 2010s, Indonesia imposed a ban on 80% of New Zealand’s beef exports, a move that led to significant losses for exporters. New Zealand successfully challenged the ban at the WTO, but it is unclear whether a similar challenge will arise over dairy imports.
In the meantime, the Australian Broadcasting Corporation (ABC) reported that 50 dairy heifers were flown from Sydney to Jakarta last week as part of the government's free school lunch program. The animals were transported through Java and Sumatra, wh ere they are now part of a feedlot operation in Lampung, run by Consolidated Pastoral Company, one of Australia's largest cattle companies with operations in Indonesia.
Consolidated Pastoral's CEO, Troy Setter, discussed plans to process milk either on-site or at government-established centralized processing hubs, further complicating the situation for exporters.
With the dairy sector now facing an uncertain future in Indonesia, industry stakeholders await more details on the evolving policy and its potential impact on trade.
The new condition, which has been communicated verbally, stipulates that importers will need to source live dairy cattle in order to obtain permits for dairy product imports. While the policy has not yet been officially confirmed, it could be formalized as early as next week when permits for dairy imports in January and February are issued.
Insiders say the move could catch New Zealand exporters off guard. "Importers would be like, ‘What are we going to do with these cows? We’ve got nowhere to put them, and we certainly don’t know how to milk them,’" one source commented.
Kimberly Crewther, executive director of the Dairy Companies Association of New Zealand (DCANZ), said exporters are awaiting further clarification on the matter. "We have not seen an official policy linking dairy product import permits to cow imports, but we are aware this has been discussed," she said.
Crewther expressed concern that the new condition could disrupt a rapidly growing market, noting the significant increase in exports to Indonesia in recent years. "We look for trade in dairy products to be as frictionless as possible and in line with agreed provisions," she added. These provisions were outlined under World Trade Organization (WTO) rules and New Zealand's 2010 free trade agreement with ASEAN countries, including Indonesia.
Subianto’s goal of raising per capita dairy consumption fr om 16.27 kg to 26 kg, aligning it with neighboring countries like Thailand and Vietnam, could be undermined by this policy. The president also aims to expand the domestic dairy herd from 260,000 to 1.5 million over the next decade, but it remains uncertain how this target will be met.
Historically, Indonesia’s self-sufficiency policies have disrupted trade with New Zealand. In the early 2010s, Indonesia imposed a ban on 80% of New Zealand’s beef exports, a move that led to significant losses for exporters. New Zealand successfully challenged the ban at the WTO, but it is unclear whether a similar challenge will arise over dairy imports.
In the meantime, the Australian Broadcasting Corporation (ABC) reported that 50 dairy heifers were flown from Sydney to Jakarta last week as part of the government's free school lunch program. The animals were transported through Java and Sumatra, wh ere they are now part of a feedlot operation in Lampung, run by Consolidated Pastoral Company, one of Australia's largest cattle companies with operations in Indonesia.
Consolidated Pastoral's CEO, Troy Setter, discussed plans to process milk either on-site or at government-established centralized processing hubs, further complicating the situation for exporters.
With the dairy sector now facing an uncertain future in Indonesia, industry stakeholders await more details on the evolving policy and its potential impact on trade.
