Indonesian Wheat-Based Products Export Hit $1.2 Billion
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Indonesia’s trends towards urbanization and a growing middle class continue, and high prices of domestically produced rice outside of the primary harvest time will drive up the consumption of Wheat-based foods. In addition, an improving economy, social media exposure, better health awareness, and online marketplaces offer space for an increasingly diverse diet and expansion of bread, pizza, and pasta outlets. Visits to malls, restaurants, and tourist destination areas are increasing. BPS reported that starred hotel occupancy rate in January 2023 increased to 44.86 percent compared to the same period in January 2022 at 42.43 percent.
However, high international Wheat prices during the first half of 2022/23 and volatile exchange rates increased Wheat flour production costs. Flour mills transferred these production cost increases to the retail prices of Wheat flour. The price of one famous brand of flour, Segi Tiga Biru, has increased by 20.9 percent from IDR 11.000/kg ($713/MT) on March 23, 2022, to IDR 13,300/kg ($863/MT).
Two-thirds of Indonesian Wheat flour users are considered Small and Medium Enterprises (SMEs), characterized as traditionally managed, family-owned, and community-oriented businesses. These include small-scale wet noodle makers, street food vendors, low-end bread and bakery businesses, and traditional Indonesian cake makers. During the COVID-19 pandemic, when Wheat prices skyrocketed, SME businesses with limited capital struggled to survive. Bakeries selling IDR 2,000 bread had to increase their prices. Some of the SMEs had to close down. However, the other third of the Wheat flour-using industry, which is large and modern, including several publicly-listed companies with advanced production facilities and professional management, is growing as demand increases.
These producers include instant noodle manufacturers, high-end bakeries, and cookie and biscuit manufacturers. Growth will come as more Western or Korean and Japanese food trends are introduced to Indonesia, such as Japanese cheesecake and Korean cheese bread. High rice prices will drive up instant noodle consumption. The World Instant Noodle Association reported on May 13, 2022, that Indonesian instant noodle consumption in 2022 increased to 13.27 billion packs from 12.64 billion packs in 2020.
The growth of Wheat flour consumption in 2022/23 is also expected to come from large industries with a more stable market with longer shelf lives, the ability to sell products at modern markets, and strong global demand. APTINDO reported that exports of Wheat-based products reached a total of $1.24 billion in 2022, an increase of 19.5 percent from $1.04 billion in 2021, with sweet biscuits, instant noodles, pastries, and pasta seeing the most significant increase in demand. From July 2022 to January 2023, Wheat products were exported to Malaysia (21.7 percent), the Philippines (9.4 percent), Cambodia (8.2 percent), and Australia (7.6 percent).
According to AgFlow data, Indonesia imported 0.2 million tons of Wheat from Australia in
Apr-May 2023, followed by Canada (0.13 million tons), Bulgaria (64,042 tons), and Russia (55,000 tons). Total imports reached 1.6 million tons in Jan-May of this year.
Despite higher international Wheat prices and domestic corn production, Wheat for feed consumption is expected to remain steady at 1.7 MMT in 2022/23 and 2023/24. The price spread whereby feed mills begin incorporating more Wheat over local corn is approximately IDR 400- 500/kg ($25.9 – 32.4/MT). With significantly reduced Ukrainian Wheat supplies to Indonesia, feed mills are switching to more Indian Wheat. Wheat comprises about 17 percent of layer feed formulation and 11 percent of aquaculture feed formulation.
Indonesian Wheat Stocks
Due to lower imports and higher food consumption, 2022/23 ending stocks are expected to decrease to 1.278 MMT of Wheat equivalent compared to 1.658 MMT of Wheat equivalent in 2021/22. Reflecting higher food consumption and slightly higher exports, 2023/24 ending stocks are forecast to further decline to 1.093 MMT of Wheat equivalent.
Other sources: USDA
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