CEPA AN AGREEMENT TO CELEBRATE
BY ELLEN PRUDEN
Cereals Canada welcomes the signing of the Canada-Indonesia Comprehensive Economic Partnership Agreement (CEPA). Set to take effect in 2026, an exact date has not been set. This groundbreaking agreement promises to usher in a new era of growth and innovation for the Canadian cereals industry and solidify Canada’s position in the Indonesian market.
The most populous country in Southeast Asia, Indonesia is Canada’s second-largest market for non-durum wheat. Over the past five years, Canada has exported an average of slightly more than two million tonnes of non-durum wheat annually to Indonesia, accounting for 11 per cent of average non-durum wheat exports. In 2023, Indonesia purchased 2.4 million tonnes of Canadian non-durum wheat valued at $1.1 billion.
CEPA has been in the making for the last three-and-a-half years. In fall 2021, Canada launched free trade agreement negotiations with Indonesia with the goal to eliminate already low tariffs and improve conditions needed to facilitate transparent and predictable science-based trade.
On Dec. 2, 2024, Canada and Indonesia signed a joint statement to announce conclusion of negotiations for the agreement. One of the key benefits included in the document is a comprehensive provision on agricultural biotechnology, a first for Indonesia in a trade agreement.
CEPA also features a broad tariff elimination for Canadian agricultural exports that includes cereals. It also sets guidelines for sanitary and phytosanitary regulations as well as other technical rules of trade. Furthermore, the agreement aims to spur investment by both countries and create new economic opportunities.
Indonesia is a core stop on the New Crop Trade and Technical Missions annually conducted by Cereals Canada. A crucial market for Canadian wheat, the country is home to the world’s largest flour mill, both in size and capacity.
“Bogasari Flour Mills has at least 50 per cent of the flour milling capacity in the country,” said Dean Dias, CEO of Cereals Canada. “We engage with key staff, millers and executives at Bogasari every year either through our New Crop Trade and Technical Missions or as part of the technical programming we provide at our facilities in Winnipeg. Working with the millers and providing them with an understanding of the quality and functionality of Canadian wheat is critical for Canada’s continued success.”
Although Indonesia is a growing market for Canadian wheat, our product faces competition from key players such as the United States and Australia. Despite this, Canada maintained an average market share of 20 per cent between 2019 and 2023. “Canadian wheat is preferred by the Indonesian bread sector due to its suitability for both no-time and sponge-and-dough baking processes that are used across various baking sectors,” said Elaine Sopiwnyk, Cereals Canada vice-president of technical services.
The sponge-and-dough method is a two-step bread-making process in which a yeast-based sponge is first created and allowed to ferment before being combined with the remaining ingredients to form the final dough. Canadian wheat has the right protein structure to work for both baking methods, said Sopiwnyk. “We receive a lot of positive feedback about the versatility and quality of Canadian wheat.”
The population of Indonesia is approximately 280 million and rising. This growth, coupled with the expansion of its middle class, has generated greater wheat consumption. Bread and pasta consumption has increased as many Indonesians opt for wheat-based breakfast products instead of traditional rice-based meals.
As an alternative to rice, instant noodles have also gained popularity. Australian wheat is preferred to produce noodles because of its colour and texture, but there is growth potential for Canadian wheat in instant noodle production.
The CEPA is projected to significantly boost Canada–Indonesia trade, a positive development for Canadian cereals, Canadian farmers and the entire cereals value chain. Dias is optimistic the forthcoming agreement will produce positive results and believes working with flour mills such as Bogasari is key to Canada’s success. “We expect this new agreement, along with our organization’s long-standing relationship with Indonesian millers, to set the stage for future growth and co-operation,” he said. “Cereals Canada looks forward to strengthening these ties.”
Ellen Pruden is Cereals Canada vice-president of communications and value chain relations.
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