Europe is one of the world’s leading importing regions of herbs and spices, accounting for about one-quarter of the world’s total imports of spices. The European demand for spices and herbs has been growing immensely over the years, especially during the Covid-19 pandemic, which saw an increasing trend of spices imports by 16.7%. This is due to European consumers’ perception of spices such as garlic, cinnamon and ginger as an alternative to increasing the body’s immunity against the Covid-19 virus. The Europeans also used spices as food additives, seasonings, and ingredients for herbal products, cosmetics, fragrances, and medicines. The sectors that use the most spices are the household sector, retail, hotel/restaurant/café (Horeca).
Indonesia’s main export products for spices to the Netherlands are pepper (EUR 7.9 million), vanilla (EUR 710 thousand), cinnamon (EUR 13.5 million), cloves (EUR 790 thousand), nutmeg, mace and cardamom (EUR 20 million). In 2021, the export value of Indonesian spices to the Netherlands had only reached 43 million euros with a 24% market share, while the export value to the European Union (EU) had only been worth 100 million euros with an 11% market share. Thus, a 76% – 89% untapped market opportunity in the Netherlands and European Union for Indonesian spice exports is still available. However, Indonesian spice exporters must be able to meet the requirements for quality assurance and food safety by meeting maximum residue limit for contaminants such as aflatoxin, ochratoxin, pesticides etc. This can be achieved by implementing Good Agricultural Practices and HACCP (Hazard Analysis and Critical Control Point) along the value chain to ensure product acceptance in the European Union market.
Those are the key takeaways from the Seminar on Opportunity, Challenges and Requirements of Spices Export to the European Union, organised by the Directorate General of National Export Development (DGNED), the Ministry of Trade, with support from the EU-funded ARISE+ Indonesia, on August 11, 2022.
The Indonesian archipelago has been known throughout history for its plethora of spices. More than 30,000 species can be found in the archipelago, including nutmeg and mace, cloves, andaliman, cinnamon, pepper, ginger, and many more. Nutmeg grew native in the eastern Maluku (Moluccas) Banda Islands, also known as Spices Island, while Cloves were originally found in the Moluccan islands of Bacan, Halmahera, Ternate, and Tidore.
In medieval times, Indonesia was the leading supplier of spices to the world, drawing many foreign traders, including European explorers. The Maritime Silk Road, a maritime section of the historic Silk Road connecting Southeast Asia and Europe, was established due to spices trading. As important as the spice commodity was back then, in 1677, with the Treaty of Breda, the Dutch were willing to cede New Amsterdam (now Manhattan, New York) to the English in return for Banda Island, the only producer of nutmeg. At that time, nutmeg was more valuable than gold.
Unfortunately, after two centuries of glory, Indonesian spices exports declined due to challenges the farmers faced, including issues of aflatoxin and other herbicides, expensive and lengthy certification process, low productivity, land-use competition, and inadequate post-harvest knowledge.
The Indonesian Government wishes to restore the glorious Indonesian spice era by launching an Indonesia Spice Up the World programme. By 2024, it is expected that more than 4,000 Indonesian restaurants will open worldwide, and the value of spice exports will reach USD2 billion.
Addressing the seminar’s opening on behalf of the Director General for National Export Development of the Ministry of Trade, the Director of Primary Products Export Development, Ms Merry Maryati, reiterated the DGNED’s commitment to supporting farmers, producers, and exporters in improving spices exports.
Ms Maryati presented four DGNED strategies to address the challenges and boost spices exports, namely:
- Collaboration with certification bodies to facilitate Indonesian businesses in HACCP certification;
- Partnerships with the Indonesian Organic Alliances to support farmers and spices producers in organic farming and certification;
- Collaboration with ARISE+ Indonesia to build the branding of Geographical Indications (GI) and strengthen the institutional capacity of GI Rights Holder Communities (MPIG);
- Leveraging 46 trade representatives in 33 countries to promote Indonesian spices and commodities and facilitating business matching and trade expos for Indonesian products and spices.
Acknowledging the EU support in enhancing Indonesia’s trade competitiveness, the Indonesian Ambassador to the Netherlands, H.E. Mayerfas, praised the seminar as an essential platform for Indonesian business actors to understand the opportunity, challenges and requirements for exporting spices to the EU.
H.E Mayerfas suggested that similar activities can be carried out for other export products to the EU.
“With support from EU-funded ARISE+ Indonesia, we hope that the European authorities will be more open to accepting Indonesian products,” H.E Mayerfas said.
Delivering opening remarks, the Charge d’ Affaires a.i EU Delegation to Indonesia and Brunei Darussalam, Mr Margus Solnson, reaffirmed that European Union has been a strong and committed partner to Indonesia for over 30 years in a wide range of areas. However, Mr Solnson added that given the size of both economies, solid trade investments are far below their true potential.
“There clearly is untapped potential in bilateral trade relations. The successful conclusion of the ongoing European Union – Indonesia Comprehensive Economic Partnership Agreement (CEPA) would be the key element to strengthen economic ties between European Union and Indonesia and boost economic growth for both countries,” Mr Solnson said.
The seminar featured prominent speakers, namely the Trade Attaché for the Indonesian Embassy in the Netherlands, Mr Sabbat CJ Sirait; the CEO of Pacific Spizes in the Netherland, Mr Rico Vogel; the Chairman of Sustainable Spices Initiatives, Mr Dippos Naloanro Simanjuntak; and the Chairman of the Association of Indonesian Certification Bodies, Mr Nyoman Susila. The ARISE+ Indonesia Export Quality Infrastructure Senior Expert, Mr Arief Safari, moderated the seminar.
In his presentation, Mr Sabbat highlighted the importance of Government support to address the expensive logistic cost that hindered Indonesian exports to the European Union. Meanwhile, Mr Anro (Naloanro) underscored the importance of labelling, packaging, food safety compliance, and aiming at organic, sustainable and fair trade spices to target premium and niche markets.
From the buyer’s perspective, Mr Vogel presented the standard and requirements for spices exported to the Netherlands. Meanwhile, Mr Nyoman delivered a comprehensive presentation on Quality Standard References for Spices Products and Conformity Assessment Scheme for pepper, nutmeg, cinnamon, cloves, cardamom, vanilla, turmeric, and ginger.
More than 250 Indonesian businesses and associations participated in the seminar, in person or online. The participants were enthusiastic during the discussion and raised many questions, especially regarding the certification, cost, and added value pricing.
Responding to the participant’s question, Mr Anro explained, “For smaller or startup enterprises can start with the local standard organic certification and climb up to a higher grade of organic certification. SNI certification is accepted for export to ASEAN and the Middle East, but the EU market will require more advanced organic certifications. Even within the EU, each country applies different standard requirements; for example, Germany requires Naturland organic certification, while Switzerland requires Bio Swiss.”
Prior to the seminar, ARISE+ Indonesia conducted a mini study to get an overview of spices products export readiness, SMEs’ export readiness and support needed to enhance spices exports. The research was conducted using a case study method. The data was collected by distributing questionnaires to participants registered for the seminar as target respondents, but only 85 companies responded.
Of the 85 respondents, 50 respondents (58.8%) were in the form of LLC (PT), 18 respondents (21.2%) were in the form of Limited Partnership (CV), 12 respondents (14.1%) were individuals, 3 respondents (3.5%) were cooperatives, and 2 respondents have other forms (2.4%).
The study results are as follows:
- Respondents’ readiness to export spice products is average, with a relatively weak domestic sales base and marketing methods and relatively weak export resources and management commitment.
- The readiness of spice products prepared by respondents for export is in an average to relatively strong condition, the product positioning is average in the domestic market, and the product benefits are average with relatively strong product adaptation.
- Most respondents (92.9%) need further support or facilitation from the Government or development projects such as ARISE+ Indonesia. The facilitation needed relating to quality is the application of ISO-9000 (56.5%), the application of HACCP (62.4%), the application of the Organic Certification scheme (58.8%) and the application of Fair Trade Certification (65.9%). Meanwhile, the facilitation needed relating to non-quality is the facilitation of getting business partners (89.4%), facilitation of trade fairs (65.9%) and facilitation of export funding (64.7%).
Met on a separate occasion, the Director General of National Export Development, Mr Didi Sumedi, appreciated the study conducted by ARISE+ Indonesia that can be used as supporting data to plan the proper support for Indonesian MSMEs.
“We hope there will be continued collaboration activities with ARISE+ Indonesia to follow up on the study results, perhaps by organising the implementation of Organic and Fair Trade Certification training, which was also discussed by participants in the seminar,” Mr Didi said.
Article is owned and written by Arise Plus Indonesia