Wheat exporter developing the ‘powerhouse model’ with Indonesia

November 2020

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New South Wales wheat-processing and grain-distilling company, Manildra Group, is one of Australia’s largest agriculture exporters. In tough times, 2020 has been a year of opportunity across ASEAN economies. The new Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA) will expand grain-export options, and the company’s new hand sanitisers are already selling in the region.

In 1952, Manildra Group (Manildra) began life as a single flour mill in Manildra, New South Wales. Today it purchases grain from across Australia and produces a huge range of wheat-based products.

According to Peter Simpson, General Manager, the company operates one of the largest wheat-starch and gluten-manufacturing production facilities in the world.

‘We process wheat into starch, which is used in paper; gluten, which is used in baking; and glucose which is used in confectionary,’ he says. ‘Also we produce DDGS [dried distillers’ grain with solubles] which is used for animal feed.’

Manildra Group began exporting in the early 1980s. Today it is one of Australia’s premier agricultural exporters, with huge container operations at Port Botany. This hub exports a full range of wheats, starches and animal feeds across Asia, North America and Europe.

Austrade helps Manildra gain a footprint in Indonesia

Manildra has gradually expanded its investment in Indonesia, and now has offices in Jakarta and Surabaya. According to Simpson, Austrade supported Manildra extensively as the company set up its offices.

‘We had a yearly retainer with Austrade from 2011 to 2016 and that helped us overcome many of the regulatory and bureaucratic challenges,’ he says. ‘Indonesia is now an extremely important market for us. Austrade, the Department of Agriculture, Water and the Environment, and the Department of Foreign Affairs and Trade (DFAT) help us understand what’s going on.’

Recently, Austrade’s role has included providing market analysis and identifying business opportunities. The Austrade team also helped by introducing Manildra to potential customers.

‘Austrade are good at reporting on opportunities,’ says Simpson. ‘They keep us up to date on who is buying what, and conduct thorough research on potential customers.’

IA-CEPA & new export opportunities

One of the biggest current opportunities is better access for Australian exporters to the Indonesian market.

The Indonesia–Australia Comprehensive Economic Partnership Agreement (IA-CEPA) expands the annual quota of imports available to Australian companies to 500,000 tonnes of feed grains – including wheat, sorghum and barley.

In addition, outstanding tariffs on most remaining cereals and grains will be abolished. This includes the five per cent tariff on rolled oats and the five per cent tariff on unroasted malt.

The Indonesian government also views IA-CEPA positively. Officials have highlighted the benefits of the ‘powerhouse concept’. This involves Australian imports being processed into goods, which are then exported by Indonesia.

‘IA-CEPA opens opportunities for us, especially with our product range,’ says Simpson. ‘Also, part of the agreement concerns future alignment over food standards, which are very important.’

As the agreement evolves, Simpson anticipates that the alignment of food regulations may help the company increase premium food exports. This supports Indonesia’s own food-manufacturing and export ambitions.

‘We expect to grow exports to Indonesia, including in value-added starches that are used in the food industry,’ he says. ‘We already produce some modified starches that could have great potential in Indonesia’s food-manufacturing sector.’

From distilled grain alcohol to hand sanitiser

With supply chains still impacted by COVID-19-related lockdowns, many exporters are diversifying. Manildra is no exception. When demand for hand sanitisers shot up in April 2020, executives spotted an opportunity.

‘We distil alcohol as part of our grain fermentation operations,’ says Simpson. ‘It is exceptionally pure – meeting WHO standards for sanitiser.

At lightning speed the company created a new brand, ‘Stay Safe’, and the market response was terrific. Global demand has also taken off. Manildra Group is now exporting the sanitiser to the Philippines and Austrade is assessing export opportunities in Indonesia.

Growing exports in tough times

Building an export market in Indonesia has presented challenges as well as opportunities. Manildra says that having feet on the ground has been essential. And while current travel restrictions make expansion hard, Manildra’s local team can help.

‘Having good representation in overseas markets overcomes most of the bureaucratic and regulatory challenges,’ he says. ‘Our marketing offices in Jakarta and Surabaya are our foundation in Indonesia.’

While travel bans remain in place, the Australian Embassy team also remains a hugely valuable resource.

‘We are in constant contact with Austrade’s Jakarta team, especially with their technical people — and sometimes it’s like having local representatives,’ he says. ‘They are great at doing statistical work and telling us what’s going on in the market.’

About Austrade

The Australian Trade and Investment Commission (Austrade) is the Australian Government’s international trade promotion and investment attraction agency.

We deliver quality trade and investment services to businesses to grow Australia’s prosperity. We do this by generating and providing market information and insights, promoting Australian capability, and facilitating connections through our extensive global network.

To discover how we can help you and your business, visit austrade.gov.au or contact us at info@austrade.gov.au or on 13 28 78 (within Australia).