For the week of April 8, 1996

Discovering Indonesia

By Stewart Truelsen

U.S. agricultural counselor Michael Humphrey can hardly wait to share his enthusiasm for Indonesia as a market. When an American Farm Bureau fact-finding mission met him in Jakarta, Humphrey acted like a man who had struck gold--and perhaps he has. Indonesia is a potential gold mine for the sale of American farm products.

It's no secret that Asia is the fastest growing market for U.S. farm exports, but Indonesia is barely noticed. Americans are not very familiar with this string of islands stretching from beneath Malaysia almost all the way to Australia.

Japan, with a population of 125 million people, is the leading market for U.S. farm commodities. Indonesia ranks 19th as a market, but has a population of 200 million, fourth in the world. It's no Japan yet, but Indonesia is a country on the move economically, and it has more mouths to feed. The potential is enormous.

What it will take to get Indonesia noticed is to have it join the billion dollar club of buyers of American farm products. Sales in 1995 totaled around $850 million. A billion dollars is not far off.

"Indonesia is trying to develop its feed industry so it can increase its production of chicken for protein," says Humphrey. "The second area of great potential is the wheat industry." A sure sign that export gold can be mined here is this statistic--Indonesia has the highest per capita consumption of rice anywhere the world.

"What we are now finding is that they are diversifying into the wheat products area, particularly noddles and bread products," says Humphrey. The flour milling industry is undergoing a rapid expansion, but the country grows no wheat. It all has to be imported. "By the year 2000, I think it's quite possible Indonesia could be one of the top four or five wheat importers in the world," adds Humphrey.

If you have checked any of your shirt labels lately, you won't be surprised that Indonesia is the world's largest importer of cotton, surpassing China and Japan. Nearly half of that cotton comes from the United States. But that's not all. U.S. exports of consumer food products have jumped 500% in five years, as Indonesia opens up supermarkets and the restaurant trade booms.

Many of these export nuggets have been mined with the hard work of the Agriculture Department's Foreign Agricultural Service and industry government cost-share programs, such as the Market Promotion Program and the Foreign Market Development program.

Future trade relations with Indonesia may depend on how well American agriculture defends these programs from federal budget cutters. The U.S. isn't the only agricultural exporter to stake a claim here. Australia, New Zealand, the European Union and other major competitors are active as well. Indonesia is being discovered.