Department of Commerce: Demand to review zero import duty on Australian milk makes no sense

TEMPO.CO, Jakarta – Director-General for International Trade Negotiations at the Ministry of Trade (Kemendag), Dyatmiko Bris Witjaksono, said the request to revise the zero percent import duty on imported milk from Australia and New Zealand was illogical. According to him, increasing tariffs will lead to higher prices for raw materials and milk.

“If it is revised, it does not make sense. Why? If the revision increases, the prices of raw materials needed within the country will also increase. Where does the cost come from? Why do we have an expensive economy?” Jatmiko told reporters at the Parliament Complex in Jakarta on Wednesday, November 20, 2024.

According to Jatmiko, as the cost of raw materials increases, milk will also become more expensive. He said it would become increasingly difficult for the people of Indonesia to consume milk.

According to Dyatmiko, free trade agreements with Australia and New Zealand are useful not only for supporting the export opportunities of domestic producers. This agreement also plays a role in meeting the needs of domestic industry, including the provision of raw materials.

Dyatmiko said that not all domestic milk meets the standards, so it is not absorbed optimally. According to him, the milk processing industry needs to improve its quality. The demand for milk continues to grow, exceeding the volumes produced by farmers.

Therefore, Dyatmiko said that his institution is preparing a scheme for the development of local dairy milk. The Ministry of Trade will coordinate its actions with the Ministry of Agriculture and the Ministry of Industry and Trade.

Meanwhile, Trade Secretary Budi Santoso said the import of milk is regulated in the Trade Minister’s Decree (Permendag) No. 36 of 2023, Permendag Junction No. 8 of 2024. This policy requires the recommendation of a technical ministry, namely the Ministry of Agriculture.

Therefore, Budi Santoso admitted that he communicated with the Ministry of Agriculture regarding the rules for importing milk. It is considering updating the requirements so that imported guidelines require the industry to absorb local milk. According to him, this is the fastest step.

“If changes (to the agreement) take a long time, the changes need to be negotiated. Just defining the schedule already takes a lot of time. We are looking for the fastest way,” Budi Santoso told reporters at the Parliament Complex in Jakarta on Wednesday. , November 20, 2024

Currently, the number of national dairy cooperatives reaches 59 units. In 2023, the number of cows in dairy production cooperatives amounted to 227,615 heads. They produce 470 thousand tons of milk. Meanwhile, modern dairy farms with 32 thousand cows can produce 164 thousand tons of milk.

To meet these needs, Cooperatives Minister Budi Arye Setiadi said the government is importing milk from abroad. Indonesia’s largest importer is currently New Zealand, with milk production of 21.3 million tons. Together with Australia, New Zealand operates an FTA with Indonesia.

The agreement eliminates import duties on dairy products, making their products at least 5 percent cheaper than those of global dairy exporters. Australia and New Zealand’s geographic proximity to Indonesia makes their dairy products very price competitive, Budi Aryeh said.

Budi Aryeh said imports of skim milk have led to a decline in the price of fresh milk. Fresh milk currently costs Rs 7,000. The price of fresh milk should reach Rs 9,000. “Dairy farmers are suffering losses,” Budi Aryeh said at the Ministry of Cooperatives office in Jakarta on Monday, November 11, 2024.

KHAN REVANDA | RR ARYANI

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