Technical Assistance I
Market opportunities for ginger exports from Indonesia do exist. Demand for biopharmaceutical products is booming worldwide. According to ITC, the trade of oleoresins, the essential oil extracted from ginger, amounted to over US $ 833 million in 2020 while EU imports were over US $ 213 million (for detail trade statistic data on ginger, please see the infographics above). The potential of the EU market was highlighted by the Indonesian trade attaches in the Netherlands and Spain who receive frequent enquiries on ginger. Price competition is prominent in this market, with Indonesian exporters facing strong competition from producers from China, India, Peru and Brazil. Indonesian prices are relatively high because of the high logistics costs as Indonesian ports are less well situated on world shipping line routes compared with competitors from China and Brazil. Small enterprises of the sector also face the challenge of meeting certification requirements as is many other sectors.
These issues were discussed during the SME Sensitisation Webinar on biopharma commodities, focusing on ginger, hosted by the Directorate of Cooperative and Micro, Small, and Medium Enterprises (MSMEs) Development in the Ministry of National Development Planning (Bappenas). The webinar was organized in collaboration with ARISE+ Indonesia, Thursday (14/03).
The fourth webinar in the series on SME export opportunities and challenges brought together Indonesian producers, exporters and government officials with foreign buyers.
In his opening remarks, the Director of Cooperatives and MSME Development at Bappenas, Mr Ahmad Dading Gunadi, said that the Government has designed a new integrated and holistic approach to MSME development that supports the strengthening of both downstream and upstream processes. The collaborative effort by Bappenas and ARISE+ Indonesia is geared towards downstream export processes. This new Major Project is currently piloted in five sectors, with one sector selected in one province.
Mr Dading indicated that the main objective of the webinar was to enable farmers and MSMEs to learn more about the EU market for ginger products directly from buyers and to encourage cooperation in the downstream process of biopharmaceutical products.
Three importers joined the online debate: Mr Hans Versteegh, the founder of Now Organic International BV Netherlands; Mr Mahen Subramanian, the CEO of Mac Alliance Ltd in the United Kingdom; and Mrs Suliyanti Sunaryo, a successful Indonesian business-woman who manages the House of Indonesia venture in Sydney, Australia.
Mr Versteegh explained that he intended to import ginger from Indonesia three years ago. His plans did not materialize as the process of obtaining organic certifications for ginger was cumbersome and did not result in an agreement. Consequently, he decided to continue importing ginger from China and Peru.
"Ginger is a price-driven commodity. If Indonesian exporters can offer a competitive price, they will have a good chance," Mr Versteegh aid.
Mr Subramanian shared a similar experience. His plans to sourcing ginger from Indonesia has met a few issues. Many enquiries remained unanswered. He also mentioned that the quality-price comparison is not favourable for Indonesian ginger exports. Mr Subramanian does not yet consider importing ginger from Indonesia due to the high freight costs. He stresses that Indonesian exports need to be not only competitive in quality but surely also in price. The high freight costs are a major deterrent to import Indonesia's ginger. He now mainly concentrates on China, Peru and Brazil to procure the commodity.
"Indonesian ginger may have better quality than China, but we don't import from Indonesia due to high logistics costs," Mr Subramanian said.
Haris Setiawan, the Senior Trade Analyst of the Ministry of Trade responsible for Export Promotion, recommends that an in-depth analysis of Indonesia's ginger sector be carried out to develop a Unique Selling Promotion marketing strategy, which would identify the main differentiation factors that Indonesian producers and exporters may put forward to to promote ginger. Such a framework will systematically scrutinize prices, quality, transport and logistics costs, etc.
Mrs Suliyanti from the House of Indonesia in Sydney has been importing ginger drinks from Indonesia for 25 years. She provided additional insights for MSMEs interested in exports to create products according to the targeted market's tastes. In terms of drinks, for example, in many countries consumers have a preference for products that are healthier and lower in sugar while sweet products are generally preferred on the domestic market
The webinar also invited Dr Miftakhur Rohmah of the Mulawarman University in East Kalimantan as a resource person. She indicated that East Kalimantan produced 2,489 tons of ginger in 2020. She shared several ginger processing technologies with farmers, cooperatives, and MSMEs, including drying, powdering, spray drying, and distillation to produce dry ginger, ginger powder, instant drinks, and essential oil.
"Processed ginger has a low expiration risk and is less sensitive to long shipping times while generating higher prices and incomes for producers. However, the issue is that promoting processed ginger requires significant investments that local stakeholders cannot yet afford," Dr Rohmah said.
The Trade Attaché of the Indonesian Embassy in the Netherlands, Sabbat Christian Jannes, stated that the market potential for Indonesian ginger in the EU is still considerable. Ginger exports to the Netherlands increased by more than 20% in 2021. This is partly explained by the enhanced focus on healthy and organic products in the wake of the Covid-19 pandemic.
The Head of the Indonesian Trade Promotion Center (ITPC) in Barcelona (Spain), Freddy Josep Pelawi, reported that many potential buyers expressed interest in importing spices from Indonesia, including ginger, during the Alimentaria 2022 Exhibition in Barcelona, Spain, 4-7 April 2022. However, he notes that Indonesian companies face difficulties in meeting customs requirements in Spain. Consequently, they tend to import via the Port of Rotterdam in the Netherlands.
In his closing remarks, Mr Dading extended his gratitude to the buyers, academia, trade attaché, and ITPC representative for their contributions to the discussion. Bappenas is particularly interested in enriching the database of Mulawarman University to have a sound understanding of what Indonesia can offer with respect to ginger production and exports.
Complementing the webinar series, ARISE+ Indonesia will support Bappenas, the Ministry of Trade, and the Ministry of Cooperatives and MSMEs to create digital tools to help Indonesian exporters and producers of Ginger in tapping new market opportunities, especially in the European Union.
For presentation on Ginger Production in Kalimantan, please access here.
