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American ag applauds WTO's Indonesia ruling

ST. LOUIS, Mo. — Farm and food exporters are hoping for more reliable access to Indonesia’s fast-growing food market, after the World Trade Organization (WTO) ruled against import measures applied to products from the United States and New Zealand.

At issue were 18 of Indonesia’s import measures for horticultural and animal products. The WTO ruled none of the measures could stand, under trade guidelines governing trade between WTO member countries, according to the Office of the U.S. Trade Representative (USTR).

The ruling will pave the way for future beef exports to a growing market, said Joe Schuele, U.S. Meat Export Federation (USMEF). “Exporters will pull back if a market doesn’t seem open,” he said. Indonesia had already eased some restrictions on beef, he explained, with beef exports likely to set a record this calendar year.

The WTO ruling will only help future beef exports, Schuele said. “Having that ruling from WTO gives U.S. exporters, and importers in Indonesia, more confidence.”

The volume of U.S. beef exports to Indonesia almost doubled from January to September this year, compared to 2016. “Beef heart is a very popular item there, and liver,” said Schuele.

Indonesia is the third-largest importer of U.S. beef hearts, and the beef industry believes the market potential extends beyond variety meats shipped for use by Indonesian meat processors. “Indonesia has never had the opportunity to develop as a supermarket and restaurant destination for U.S. beef.”

Limited arable land for domestic beef production and low per capita beef imports create the potential for Indonesia to become “one of the world’s largest beef importing countries,” according to USMEF. “We are excited about the opportunity to play a big part in its development by introducing U.S. beef to a much wider group of Indonesian customers,” said Philip Seng, CEO.

Beef is not the only U.S. meat sector that stands to benefit from the WTO ruling. The poultry industry estimates a $177 million market for broiler meat in Indonesia. The country does not issue import licenses for poultry products, one of the trade measures WTO ruled against.

“We’re hoping that this translates into U.S. poultry (meat) exports to Indonesia, something we’ve not seen for nearly 10 years,” stated the National Chicken Council, National Chicken Federation and USA Poultry & Egg Export Council.

Plenty of poultry genetics are already exported from the United States to Indonesia, where poultry accounts for 65 percent of the nation’s animal protein, according to the USDA. Its broiler and layer industry has modernized since the 1980s, attracting investment from foreign poultry firms, especially from Malaysia and Philippines.

Fresh apples, pears

Ten of the import measures could impact fresh produce shipments to Indonesia. The U.S. apple and pear industries have sought changes in Indonesia’s import measures, which in 2012 limited horticultural imports based on domestic production and the time from harvest of the imported crop.

That took a $50 million market for Washington state apples down to $22 million, according to Todd Fryhover, president of the Washington Apple Commission. Indonesia is an important export market for Red Delicious apples. “The industry has started the 2017 crop marketing year, and we have excellent supplies for increased shipments to Indonesia this season,” he said.

The Northwest Horticultural Council, which represents apple, pear and cherry growers on trade and policy issues, listed minimizing trade disruptions with Indonesia, “such as those resulting from Indonesia’s implementation of restrictions on importing horticultural products,” as one of its top apple trade policy goals in 2017.

Indonesia’s population is growing in both numbers and purchasing power. The island nation is the world’s fourth-most densely-populated country and home to a growing middle class, making it an attractive market for U.S. food exporters. But the nation can be difficult for food trade.

“In general terms, market access barriers are a result of a combination of protectionism, nationalism, corruption and lack of soft infrastructure among inspection agencies,” stated a report by USDA staff in Jakarta last year.

Agricultural exports to Indonesia grew from $1.1 billion in 2006 to $2.6 billion in 2016, according to the USDA. Five sectors made up 75 percent of export value, led by soybeans, valued at almost $1 billion. Following that were cotton ($349 million), feeds and fodder ($265 million), wheat ($195 million) and dairy products ($157 million).