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USDA, dairy industry collaborate to open new doors in Indonesia

Business roundtable brings together 13 U.S. dairy suppliers and 34 Indonesian dairy importers.

The U.S. Department of Agriculture's Foreign Agricultural Service (FAS), in partnership with the government of Indonesia, recently hosted a business roundtable in Jakarta, Indonesia, that brought together 13 U.S. dairy suppliers and 120-plus participants representing 34 Indonesian dairy importer companies to facilitate increased U.S. dairy exports.

Currently, the U.S. faces a 5% tariff on dairy products exported to Indonesia, while New Zealand and Australia benefit from low or zero tariffs on their dairy products due to preferential trade agreements with Indonesia. Still, U.S. dairy exports to Indonesia through the first seven months of 2019 are running 20% ahead of the same period from 2018. Overall U.S. agricultural exports to Indonesia have increased 41% in the past decade.

The U.S. Dairy Export Council (USDEC) supported the roundtable event, with USDEC chief operating officer Matt McKnight leading an industry delegation and presenting on the positive outlook for U.S. dairy in Indonesia’s growing market.

Other roundtable speakers included Joseph Donovan, U.S. ambassador to Indonesia; Ted McKinney, USDA undersecretary for trade and foreign agricultural affairs; Enggartiasto Lukita, Indonesia's minister of trade, and Vikki Nicholson-West, senior vice president of global ingredients for USDEC.

“As the ongoing trade dispute with China has impaired our access to that market, we thank the USDA for working to stimulate greater sales of U.S. dairy products to Indonesia,” USDEC chief operating officer Matt McKnight said. “There is a growing demand in Indonesia for high-quality dairy products, and the U.S. dairy industry is ready to meet this need. We look forward to expanding our market share in this valuable market and building upon the relationships forged at today’s event.”

According to USDA data, the U.S. exported more than $165 million worth of dairy products to Indonesia last year, making it the U.S. dairy industry’s seventh-largest export market. USDEC commended FAS for recognizing this opportunity for U.S. dairy exports and the Indonesian Trade Ministry for its commitment to a successful collaboration.

Beth Hughes, senior director for international affairs for The International Dairy Foods Assn. (IDFA), thanked the Administration for its efforts, saying the trip to Indonesia comes at a pivotal moment since emerging trade tensions between the European Union and Indonesia could benefit U.S. dairy.

"The EU recently imposed tariffs ranging from 8% to 18% on a provisional basis on imports of biodiesel from Indonesia. In response, Indonesia plans to retaliate with tariffs of 20-25%, up from 5%, on EU dairy products,” Hughes explained. "The trade spat between the EU and Indonesia could be an opportunity for U.S. dairy exporters to grow market share.”

In 2018, the U.S. sent nearly $166 million in dairy products to Indonesia, including more than $104 million of skim milk powder (SMP) and $40 million of cheese and whey. The U.S. was also the leading exporter for SMP, milk protein concentrate and lactose in 2018. “With the EU priced out of the market due to the tariffs on imports, opportunities exist to expand SMP, whey, lactose and cheese exports to Indonesia," Hughes added.

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