Milk industry still enjoys strong protection<\/p>\n
JAKARTA (JP): Indonesia is allowed to maintain a requirement
\non compulsory domestic procurement of fresh milk by milk
\nprocessing companies to protect its dairy industry for the next
\nten years, a senior official said.<\/p>\n
Director General of Cattle Breeding at the Ministry of
\nAgriculture Soehadji said Indonesia has just concluded a
\n\"consultation\" on maintaining the compulsory requirement with New
\nZealand, Indonesia's largest milk supplier.<\/p>\n
\"They (New Zealand) agreed that we would still apply such a
\nrequirement but with the limit of ten years,\" Soehadji told The
\nJakarta Post on Saturday.<\/p>\n
The government expects that after ten years of protection,
\ndomestic fresh milk producers are expected to be able to compete
\nagainst foreign producers, Soehadji said.<\/p>\n
The government, in this case the Ministry of Trade, requires
\nevery milk processing company to acquire a recommendation letter
\nfrom the Association of Indonesian Milk Cooperatives, which
\nconfirms that the company has procured a certain portion of
\ndomestic fresh milk before importing milk powder.<\/p>\n
The government allows milk processing companies to import two
\ntons of milk powder for each ton of fresh milk they procure from
\nthe domestic market. The policy will be reviewed within the next
\nsix months.<\/p>\n
Soehadji said such a recommendation letter can be traded among
\nmilk processing companies. \"It doesn't matter. As long as all
\ndomestically produced fresh milk can be absorbed by the
\nprocessing companies.\"<\/p>\n
Indonesia last year produced 403,000 tons of fresh milk, up
\n5.17 percent from the previous year. Out of last year's
\nproduction, 250,000 tons were consumed by the five largest milk
\nprocessing companies -- Nestle procuring 104,371 tons,
\nFrischevlag Indonesia 69,048 tons, Indomilk 43,985 tons, Ultra
\n18,731 tons and Sari Husada 13,185 tons.<\/p>\n
Soehadji said New Zealand had previously requested Indonesia
\nto change such a compulsory requirement, which is considered to
\nbe a non-tariff barrier, into a tariff barrier as mandated by the
\nnew General Agreement on Tariffs and Trade (GATT), which has been
\nin effect since Jan. 1.<\/p>\n
\"If the tariff system is applied for diary products in place
\nof our current requirement, the tariffs would be very high,
\nprobably up to 238 percent. And, of course, we cannot apply them
\nanyway,\" Soehadji said.<\/p>\n
In the negotiation of the new GATT, Indonesia committed to
\nlimiting the levels of its import tariffs, including those on
\nagricultural products, at no more than 40 percent.<\/p>\n
Such a bilateral negotiation between Indonesia and New
\nZealand, with an aim of settling disputes, is recognized by the
\nWorld Trade Organization, which administers the new GATT. If a
\nbilateral negotiation cannot solve disputes, the World Trade
\nOrganization Dispute Settlement Body will intervene.<\/p>\n
New Zealand, as the largest milk supplier to Indonesia, used
\nits initial negotiating right to press Indonesia to drop its non-
\ntariff barrier on dairy products. The results of the negotiation,
\nhowever, are applied not only to New Zealand but also to other
\ncountries which supply milk to Indonesia. (rid)<\/p>",
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