With the start of the ASEAN Economic Community (AEC) in 2016, Indonesia has to face tougher competition for its fruits exports. The AEC entails a high degree of free trade among its member nations and therefore competition for tropical fruit exports increases, not only in export markets in other parts of the ASEAN region but also on Indonesia's domestic market. Kafi Kurnia, Head of the Indonesian Export-Import of Fresh Fruit and Vegetable Association (Assibisindo), stated that, despite the great potential, Indonesia's fruit export volume remains small. The government is to blame as it fails to turn fruit into a key export commodity.
Based on a report from Indonesia's Agriculture Ministry there exists solid demand for Indonesia's tropical fruits in the United States, the Netherlands, Spain, Japan and the Middle East. In 2015 the pineapple was Indonesia's most valuable product in terms of fruit exports. In that year Indonesia exported a total of 193,940 tons of pineapples, generating USD $232.3 million in foreign exchange earnings. On second position came the mangosteen, followed by the banana. Other fruits that are considered to be valuable due to high global demand are the mango, orange and durian.
However, there are several interrelated factors that block higher export volumes and earnings. Firstly, the quality of Indonesia's fruit is generally low because nearly all of Indonesian fruit farmers are smallholders who lack the financial resources to invest in higher-quality machinery, pesticides and fertilizer, and who also lack mastery of higher-quality farming techniques. This low quality fruit is not suitable for export purposes. Secondly, Indonesia does not have big fruit plantations or estates. Thirdly, despite being rich in tropical fruit, Indonesia lacks a well developed cold storage & transport industry. Adequate handling of freshly picked fruit is crucial for long storage and shelf lives of fruit and vegetables.
Moreover, due to issues related to the inadequate quality and quantity of infrastructure development in Indonesia, logistics costs have become extremely high and therefore the paradoxical situation emerged that sometimes oranges imported from China are available at a cheaper price in Jakarta's supermarkets compared to those oranges produced in other Indonesian regions (and transported to that same supermarket in Jakarta).
Kurnia says the Indonesian government has a crucial role to play to overcome these weak circumstances and it should follow the example of the governments of Thailand and Malaysia that both have managed to overcome similar conditions. For example, Thailand now has vast durian estates and thus the country has become a key durian exporter (while the durian montong actually originates from Indonesia). Kurnia suggests that the Indonesian government develops a special fruit estate that delivers fruit with export quality (and quantity).
Indonesia's Top Fruit Exports in 2015:
|Key Export Markets
|USA, Netherlands, Spain
|Malaysia, Thailand, Hong Kong
|Saudi Arabia, Japan, Malaysia