Indonesia Weighs Wheat Import Options Aligning with Political Strategy


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Indonesian President Mr. Joko Widodo visited both Russia & Ukraine in the last week, becoming the first Asian country President to do so since the war began. Aside from intermediation, the President’s goal was to observe these two countries’ positions on Wheat export to Indonesia and probably to get the attention of other global Wheat suppliers. During the visit, Mr.Joko stated: “Efforts to restore global supply chains are impossible without integrating Russian food and fertilizer supplies and Ukrainian Grains supplies. In this regard, I hope that Russia will not extend the ban on the export of grain, including Wheat.”  

Indonesia is one of the top 5 Wheat importers in the world, having 275 million populations. Its import value amounted to USD2 billion with a volume of around 10 million tons in 2020. Indonesian Wheat imports from Ukraine in 2021 are estimated at USD946 million. Wheat was the 7th most imported product in Indonesia.  

In the last two years, Ukraine has been a top player in this market, tapping on its price advantage. Australia has been competing vigorously with Ukraine in the last few years, losing market share slightly despite its close proximity. Due to the Russo-Ukrainian war, the Indonesian government continues to look for alternatives to Wheat imports.  

According to the AgFlow data, Ukraine shipped 2.8 million tons of Wheat, followed by Australia (1.7 million tons) in the period of July-December 2021. Now, this landscape is completely changing. In the 1st half of 2022, Australia started retaking the lead in their market with a total shipment of 1.5 million tons of Wheat, followed by Argentina (1.1 million tons), Brazil (0.7 million tons), Canada (0.3 million tons), United States (0.1 million tons), and India (0.05 million tons). Argentina challenges Australian Wheat suppliers not only in Indonesia but also in Vietnam and Thailand.

Wheat Imports Markets by Tons

Source : AgFlow 

The Australian Prime Minister visited Indonesia last month and agreed with the President to sustain the Wheat supply chain. Indonesian Wheat Flour producers recognize that Australian Wheat is most suitable for their production needs, especially for the production of noodles, which are currently nationwide consumed in Indonesia. The demand for Wheat for the industry this year is projected to be 11.1 million tons for raw materials. 

Putu Juli Ardika, Director General of Agro-Industry at the Ministry of Industry, said national Wheat stocks lasted only to April.  Accordingly, the Indonesian Wheat Flour Producers Association asks the Government to ensure the availability of Wheat Flour supply in the local market, considering that 70% of the commodity market is micro, small, and medium enterprises, with prices expected to top out these months and continue at least until September.  

Indo-Serbian talks

Most recently, Indonesia has been eyeing Wheat imports increase from Serbia. This commitment was demonstrated by the meeting of the Indonesian President with Serbian Foreign Minister Nikola Selakovic with a limited delegation at the Merdeka Palace, Jakarta, in late May. Serbian Minister said that Indonesia is one of the most respected Serbian partners. 

In this regard, the Indonesian State-owned enterprise PT Berdikari and their business partners from Serbia have shown their readiness to facilitate the export of Serbian Wheat to Indonesia. Minister Selakovic also met PT Berdikari to discuss more detail. In late 2021, the representatives of the Agricultural Ministries of the two countries met in Belgrade to export Serbian Wheat and corn.   

Parties also discussed the number of Crude Palm Oil exports (CPO) from Indonesia to Serbia, which has increased from time to time. Serbia’s CPO imports from Indonesia have reached 30% of the total. Indonesia exported USD1.1 billion of palm oil to Russia and Ukraine in 2021.

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