October 14, 2013
US Jan-Jun dairy exports to Indonesia up 41%
During January-June of 2013, US exports of cheese, ice cream and dairy ingredients to Indonesia jumped 41% to nearly 58,000 tonnes compared to the first half of 2012.
That performance propelled Indonesia from the no. seven US dairy export destination to no. four, as January- June sales topped US$162 million. Only powerhouse buyers Mexico, Canada and China purchased more.
Strong underlying fundamentals suggest bigger numbers await, not just on the 240-million-person archipelago but throughout Southeast Asia.
Indonesia is the fourth most populous nation in the world, enjoying the solid economic growth that often follows political stability. It ranked at the top of Nielsen''s most recent Global Consumer Confidence Survey based on job prospects, personal finances and capacity to spend.
"The major multi-nationals are already in Indonesia. A number have reported over 20% annual growth for the last three years, and have yet to see a slowdown," says Dan FitzGerald, Southeast Asia representative for the US Dairy Export Council (USDEC).
Key to the most recent US gains was a marked shift in US suppliers'' approach to the market, hastened, ironically, by Indonesia''s tightening of import regulations. And as Indonesia replaced the Philippines as the largest dairy market in Southeast Asia, it became increasingly attractive to US dairyexporters.
"US suppliers are doing well. However, it is critical to keep in mind that Indonesia is only one country in the Association of Southeast Asian Nations (ASEAN)," says FitzGerald.
In that same Nielsen Global Consumer Confidence Survey, the Philippines and Thailand ranked three and four, respectively, and Malaysia and Vietnam were coming on strong.
"We expect dairy consumption across ASEAN-6 to grow 2.4%/year through 2020. This creates a requirement for an extra three million tonnes of milk, which local players are ill-equipped to deliver," Rabobank Analyst Michael Harvey noted in a recent report on Southeast Asia.
Foreign dairy suppliers, including Nestle, Japan''s Megmilk Snow Brand and New Zealand''s Fonterra Cooperative Group, have all expanded or are in the process of expanding Indonesian operations. While these companies see promise in Indonesia, they have their eyes on the broader prize, says FitzGerald.
When the 10-nation ASEAN Economic Community is realised in 2015, ASEAN becomes a tariff-free market within the region.