Willemien Viljoen, tralac Researcher, comments on the regulation of South African deciduous fruit exports to Indonesia and the recent granting of ‘Country of Recognition’ status for South African exporters

In 2009 Indonesia put in place food safety regulations for imports and exports of fresh food of plant origin. These regulations, requiring a cumbersome permission process have become increasingly troublesome for exporters of products of plant origin to Indonesia. The 2009, and subsequent regulations are seen as non-tariff barriers to food imports by many countries and have been the subject of consultations and the establishment of a Panel under the Dispute Settlement Understanding of the World Trade Organization (WTO). These proceedings have been initiated by New Zealand and the United States on the premise that the regulations violate provisions of the General Agreement on Tariffs and Trade (GATT) and the WTO Agreements on Agriculture, Import Licensing and Pre-shipment Inspections.

Towards the end of 2009 the Indonesian Ministry of Agriculture implemented Regulation Number 27/Permentan/PP.340/5/2009 regarding food safety control over the import and export of fresh food of plant origin. A regulation which has been problematic for South African exporters of fruits, nuts and other plant origin food stuff. In accordance with this regulation all South African consignments to Indonesia required a certificate of analysis to be obtained from the Plant Quarantine Station of the South African Department of Agriculture, Forestry and Fisheries. This was due to the lack of recognition of South Africa’s (as country of origin) safety control system and the lack of an equivalence agreement between Indonesia and South Africa. However, this finally changed when the Indonesian Minister of Agriculture signed the document granting South Africa “Country of Recognition” status on 11 April 2016.

The initial regulations of 2009 have been revoked twice over the last seven years with subsequent regulations coming into effect in 2011 and the latest being February 2016. Under the 2011 regulations South Africa lodged an application with the Indonesian Quarantine Agency in 2013 to be granted ‘Country of Recognition’ status for its food safety control system. This has been a long and arduous process with the status finally granted by the Minister of Agriculture on 11 April 2016 for a specific range of plant origin food stuff. These include apples, apricots, cherries, grapefruit, grapes, peaches, oranges, pears, plums and prunes.

The benefit of this ‘Country of Recognition’ status for South African exporters is two-fold. Firstly, it is no longer required that products undergo laboratory tests for pesticide residues prior to shipment; by removing the testing component fruit can be shipped to the Indonesian market sooner. Previously the lead time was about two weeks to ensure the laboratory tests are done and results received prior to shipment. Secondly, the designated South African products will now be more competitive on the Indonesian market. This is due to the fact that the recognition now grants South Africa access to the port in Jakarta, instead of products having to enter through the port of Surabaya. This drastically reduces transportation costs; by between US$ 1,500 and US$ 2000 per container. According to Anton Rabe, Executive Director of HORTGROW the recognition status will strengthen trade ties with Asia and establish a new trade regime that will ease the import process and documentation requirements thereby increasing the export potential for South African deciduous fruit.

Currently deciduous fruit trade between South Africa and Indonesia is limited. In 2014 Indonesia mainly imported deciduous fruits (those on South Africa’s approved list) from China (32%), the US (26%), and Australia (9%). South Africa was the fifth most important source country for Indonesian deciduous fruit imports in the same year; however it only supplied 3 percent of Indonesia’s total deciduous imports. Of that 3 percent the main import products were pears (42%), grapes (29%), oranges (23%) and apples (5%). In comparison with South Africa’s world deciduous fruit exports (those on the approved list) Indonesia ranked only as the 28th destination market in 2014; receiving 0.68 percent of South Africa’s total deciduous exports. South Africa mainly exported these products to Netherlands (23%), United Kingdom (15%), United Arab Emirates (7%) and Russia (6%) in 2014; mainly oranges (32%), grapes (27%), apples (19%) and pears (10%).

It is hoped that the importance of Indonesia as a destination market for South African deciduous fruit exports will increase in the coming years due to the recognition status; not just in terms of increasing current export products but also expanding the current export basket to include products not currently exported to Indonesia. These include cherries, peaches and prunes. Although the recognition status can ease the expansion of South African exports and facilitate enhanced market opportunities (through decreasing costs and the reduction of bureaucratic delays given the average MFN applied tariff by Indonesia for these products are only 5 percent), South Africa is still competing with countries closer in proximity to Indonesia which have also applied for or previously been granted recognition status. Thus South Africa might still face strong competition on the Indonesian market.

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Sources:

ITC TradeMap (www.trademap.org);

WTO (www.wto.org);

DAFF (www.daff.gov.za);

SGS (www.sgs.com);

Farming Portal (www.farmingportal.co.za);

HORTGRO (www.hortgro.co.za)