SME food producers target 25% rise in exports

The Jakarta Post , Jakarta | Thu, 05/11/2006 12:12 PM | Business

The Jakarta Post, Jakarta

Small and medium enterprises (SMEs) operating in the food industry are targeting a 25 percent increase in exports this year, a senior official has said.

The Industry Ministry's director general for small and medium industries, Sakri Widhianto, said after opening a meeting on food industry SMEs on Wednesday that the target was attainable given the 47 percent rise in exports to US$300 million in 2005 compared to the previous year.

The products exported included smoked fish and beef, cornflakes and palm oil.

He said that Indonesia's primary export markets for food products were mostly in Asia, in addition to some countries in Africa, Europe and the Middle East.

For 2006, Indonesia aims to increase its exports of halal foodstuffs to Muslim countries, such as Malaysia and Brunei, and raise its market share in the Middle East.

Exports of food products by SMEs accounted for 5 percent of their total 2005 sales of about $6 billion, according to Sakri.

Currently there are 1.4 million SMEs operating in the food industry, employing some 2.8 million people.

In the domestic market, SMEs mostly sell their products through traditional markets and convenience stores. With the rapid growth of modern retail outlets, SMEs are also eyeing the potential afforded by large multiples such as Carrefour, Giant and Hero.

Sakri admitted, however, that SMEs faced problems in selling their products through the multiples as these demanded very high standards.

""Our SMEs face difficulties with packaging and maintaining product quality,"" he said.

Another constraint, according to Association of Food and Beverage Industries (GAPMMI) chairman Thomas Darmawan, is the obligation to pay retailers' so-called listing fees -- a charge retailers impose on producers to stock their products.

Listing fees ranged from Rp 2.5 million up to Rp 22.5 million per item.

Indonesian Retail Merchants Association (Aprindo) deputy chairman T.P. Rahmat said retailers were willing to lower their listing fees for SME products as long as they met the required quality and packaging standards. (08)

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