U.S. puts pressure on Indonesia over Jakarta port closure plans
In December the Indonesian Government issued new laws giving a three-month window before the closure of the Port of Jakarta for fruit imports. With rapidly-growing fruit consumption, Indonesia has become increasingly on the radar of fresh produce exporters, notably Washington State apple growers and Californian table grape producers in the U.S. At www.freshfruitportal.com we speak with a variety of industry players about what the amendment could mean and the current efforts underway to improve the trade situation.
U.S. authorities have been negotiating with the Indonesian Government to delay the closure of the Port of Jakarta for fruit imports, according to Northwest Horticultural Council vice president Mark Powers.
Powers tells www.freshfruitportal.com the United States Department of Agriculture's (USDA) Foreign Agricultural Service (FAS) held meetings with its Indonesian counterparts to try and seal a deal, but the situation has been quiet at the moment given the Chinese New Year break.
"We have been working with the USDA and what they have been negotiating is one, a delay in the implementation of the law, but secondly and more importantly, is keeping it so that U.S. products can continue to arrive in Indonesia through the Port of Jakarta," he says.
"Indonesia recognizes US. food safety laws and a greed to them a few years ago in 2009 under their decree 27 - Indonesian importers have requested a delay of six months to a year but we don't think that's enough.
"We need access to the Port of Jakarta, where 90% of our apples that go to Indonesia arrive."
Under the amendment currently in place, after Mar. 19 the only allowed entry points in Indonesia would be the Tanjung Sea Port in Surabaya, the Belawan Sea Port in Medan, the Soekarno-Hatta Airport in Jakarta and the Makassar Sea Port.
Powers says the cost of transporting a container from Surabaya to Jakarta, which is the main consumer center of the country, could cost between US$1,500-2,000, along with the issue of time and infrastructure constraints
"Number one, you have to look at the large volumes that arrive in Jakarta, which is in the order of 2,700 containers of the 40ft reefer type, which is more than Surabaya can take," he says.
"Then you have to look at the issue of time, adding around six or seven days when you consider you have to take it off the reefer container onto the truck, and arrange the transport and then additional loading.
"It's around 800km away, and while in the U.S. you just get on a freeway and you're there, it's different in Indonesia. After about a 30-day sea voyage, an extra week is significant."
Powers says the Indonesian Government enacted the laws out of pest concerns that could affect its crops, but he emphasizes most of the fruits that the U.S. exports to Indonesia, such as apples, pears and cherries, are not among the main products grown there.
The apple threat
Washington Apple Commission export marketing manager Rebecca Lyons, tells www.freshfruitportal.com the Port of Jakarta closure would be 'very detrimental' to her industry as Indonesia is the state's fourth-largest export market.
"It's a very important market when you consider we export a third of our crop. In 2010-11 we shipped 2.6 million (42lbs) boxes there, and 90% of that goes into Jakarta, so you can see why we are so concerned about the impact," she says.
"We certainly would see exports go into Surabaya but it's not equipped, they don't have the facilities, and then there's the issue of how you get to Jakarta which is going to increase the cost and time.
Lyons adds the three month time period is too short not just for U.S. exporters but for importers in Indonesia.
"You also have to consider the impact this is going to have on Indonesian importers, who depend on the trade for their income."
Yakima Fresh sales manager Randy Eckert says his company already ships to Medan and Surabaya which would still be allowed under the new regulations, but if overland logistics to Jakarta made that venture unprofitable then shipments would likely go elsewhere in South East Asia.
"It’s going to have a large impact on us as Jakarta is a big market for red delicious apples, and without it we’ll be sending to Malaysia and other countries, with the added costs," he says.
As for political negotiations, Eckert is not overly optimistic.
"There are certainly branches and offices working on that, but when you start talking politics like that it’s like turning an aircraft carrier around. I don’t have a lot of faith – if they’ve decided to shut it down they will shut it down. Whether they’ll open it up again we’ll have to wait and see."
California Table Grape Commission VP of international marketing Susan Day, says fruit consumption is growing quickly in Indonesia with the country now the state's fifth-largest export market for table grapes.
"We do send grapes into different ports as the country is an archipelago of islands, and now they want to limit it down to four ports - while we have exports to Medan and Surabaya, out of the specific shipments that we have data on about 50% go to Jakarta," she tells www.freshfruitportal.com.
"I don't know if the other ports could cope with the large volumes going in so we're going to have to try to resolve this, as clearly the Indonesian consumers have shown that they like Californian grapes.
"The market has grown significantly over the last five to 10 years."
Day is hopeful the USDA's efforts will be able to keep the port open, highlighting that it's still "early days yet".
The view next door
Across the Pacific Ocean, Indonesia's neighbor Australia is also concerned about the affects the closure might have. Australian Horticultural Exporters Association (AHEA) president Maxwell Summers says there has not been enough warning or explanation of the decision from the Indonesian Government.
"Over the last 20 years Indonesia has invested significantly in infrastructure, in cool stores and ways to improve the movement of perishables, but now I expect there will be a lot of Indonesians who don't have us much access to fruit and vegetables because of this decision," he says.
"The Indonesian government has just done this, they haven't given us a reason."
"There will be some ways that fruit exporting government can retaliate to this, for example they could make Indonesian products ship through smaller ports, silly things like that."