Development of Agribusiness Enterprises - Asian Productivity ...

The goods are often distributed by large enterprises that have their own distribution networks
and are able to supply all the tiny shops.
Distribution channels will play an important role in selling the products because the
costs of transportation and investment are very high. The new concept of central distribution
centers for processed foods and agribusiness terminals for agricultural products has become
popular, as they are the only way to reduce losses and other costs, while also providing
healthy, safe and high-quality products.
EXPORTS AND IMPORTS OF FOOD PRODUCTS
Indonesia, with an estimated population of 210 million, is a potentially huge market.
In addition to the huge potential of the domestic market, the demand for agricultural products
for the export sector has also continued to increase. Such a trend will enable the domestic
food industry to enhance its export performance.
In the past five years, Indonesia’s agricultural production has mainly decreased or
remained flat, but the growth of the population and changes in dietary habits as a result of
education and increased incomes brought about significant increases in the consumption of
food and other agricultural products. This situation has forced the country to import most of
its agricultural and food products. Indonesia needs to continue to import food in order to feed
its large people.
The value of processed food and beverages imported by Indonesia for household
consumption increased from US$180.3 million in 1993 to US$1,397.5 million in 1999 and
US$342.9 million in the first quarter of 2000. The total value of food and beverage imports,
both for household consumption and raw material supplies for the food industry, soared from
US$1,307 million in 1993 to US$3,263.1 million in 1999. The opportunity for the short to
medium term is to supply raw and semi-processed food products for further processing
(industrial sector) or for repacking. Food safety has also become very important to
consumers.
The value of processed food and beverage exports also increased slightly from
US$738.5 million in 1993 to US$958.3 in 1999 and US$442.5 million in the first quarter of
2000. Exports of several agricultural products decreased such as coffee beans, frozen and
fresh shrimp, tea, vegetables and fish. However, exports of several types of commodities
increased such as spices, cocoa beans, fruit, palm oil, etc. The lower growth rate of exports
was attributable to the difficulty faced by food industries in obtaining raw materials due to
competition with exporters of raw materials.
In this free trade era, exports and imports of agricultural and food products have
become a common phenomenon. Exports can provide growth and profit, but it is a complex
and demanding field that may not suit every company. There are a number of factors that
constrain or impede the expansion of agricultural and food exports to several countries.
These factors include: weaknesses in the competitiveness of the country’s food and
agricultural production; low investment in the market; tariffs and other restrictions on imports
such as quarantine, labeling, regulations and standards of each importing country; strong
competition by third countries for shares of each importing country; and inadequate/
inefficient transport linkages.
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