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Agriculture exports 'potential winners' amid pandemic: Trade Ministry

Jakarta Post - September 15, 2020

Dzulfiqar Fathur Rahman, Jakarta – Indonesian agricultural exports could be "potential winners" in the pandemic as they recorded annual growth despite the downturn in global trade, according to the Trade Ministry.

The agriculture exports reached US$2.06 billion in the January – July period, marking an increase of 9.95 percent from the same period in 2019. Exports of peanuts, fruits and herbs/spices more than doubled, rising by 138.2 percent, 129.3 percent and 104.7 percent, respectively, on the year.

Trade Ministry National Export Development Director General Kasan Muhri said Monday that the surge in agricultural exports was in line with various countries' product needs in dealing with the coronavirus.

"Our potential to expand export markets is still very large," Kasan said in a virtual discussion. "Some of our agricultural products have not really dominated some regions in the context of global trade."

In the January – July period, most Indonesian agricultural goods were delivered to China, which accounted for $399.6 million or 19.3 percent of the total exports. That was followed by exports to the United States and Japan, which accounted for 9.9 percent and 9 percent, respectively.

Overall Indonesian exports were down 6.21 percent year-on-year (yoy) at $90.12 billion in this year's first seven months, while imports plunged 17.17 percent yoy to $81.37 billion. With the imports falling at a faster rate, the country booked a trade surplus of $8.75 billion.

While global trade is projected by the World Trade Organization (WTO) to decline by up to 32 percent this year, Indonesia is trying to prevent its exports from plunging further by resorting to virtual means to connect local sellers with foreign buyers. At the same time, the government is trying to limit imports of certain consumer goods.

Kasan said the Trade Ministry was mobilizing 46 trade representatives in 31 countries, comprising the Indonesian Trade Promotion Centers (ITPC) and trade attaches, to promote the country's exports.

The Trade Ministry also provided assistance for product design, packaging, certification and intellectual property rights, among other things, and offered to help exporters meet standards demanded by buyers, including organic production methods, sustainability, traceability and transparency, Kasan added.

Indonesian agriculture exports have faced several issues related to standards, including the finding of shoots in coconuts exported to Thailand and alleged deforestation for its crude palm oil shipped to the European Union, according to Junaidi, the head of compliance, partnership and quarantine information at the Agriculture Quarantine Agency (BKP).

"These are issues that we are trying to manage and minimize, so that our commodities [are acceptable and competitive] in the international market," said Junaidi.

The Agriculture Ministry was also trying to boost exports by facilitating the disbursement of Rp 33 trillion (US$2.21 billion) through the government's micro-loan program (KUR), said Indah Megahwati, the director of financing at the Directorate General of Facilities and Infrastructure at the ministry. That figure accounted for around 66 percent of this year's KUR target.

Indah said the government was devising a new cluster-based scheme for the loan disbursement in the agricultural sector, which would include an offtaker to overcome a key issue blamed for the low volume of loans issued in the sector. She said 32,000 borrowers had applied for but had not received the loans.

"We want the banks to be able to disburse the KUR for agricultural tools and machines and to our food industry. This is what we need going forward," said Indah.

Source: https://www.thejakartapost.com/news/2020/09/15/agriculture-exports-potential-winners-amid-pandemic-trade-ministry.html