Going against the grain - wheat imports in Indonesia - Brief Article - Statistical Data Included

Business Asia, June, 2000 by Michael Byrnes, Grace Nirang

INDONESIA'S BIG wheat importer Bogasari flour mills is projecting a sharp recovery in national wheat imports in 2000, despite a challenging flood of cheap imported flour.

Bogasari and Indonesia's other small wheat millers are fighting what they describe as dumped flour by taking European, Australian and Middle Eastern exporters to the World Trade Organisation.

But even with flour imports running high, Indonesia's wheat imports for 2000 are on track to rise to 3.2 million tonnes from last year's 2.6 million tonnes, according to Bogasari's top buyer and director, Frankie Welirang.

Flour imports are also rising strongly in Indonesia's now deregulated market to 350,000-400,000 tonnes last year, the equivalent of 600,000-750,000 tonnes of wheat. If freed of problematic flour imports, brought into the country by private traders, Indonesia's imports of wheat would rise to 3.8 million tonnes this year, Welirang said.

The Indonesian flour milling sector's problems with imported flour began only last year after the IMF-desired dismantling of the monopoly import regulations of the Suharto years opened the import market. But despite this, the flour milling industry is recovering well enough to project an increase in Indonesia's wheat imports back toward levels before the financial crash of 1997.

Indonesian wheat imports, then milled almost entirely by PT Indofood Sukses Makmur's Bogasari flour milling unit, peaked before the crash at around four million tonnes.

Welirang described the influx of flour, the sell-off by former state monopoly importer Bulog of 600,000-700,000 tonnes of wheat in 1999 and wheat buying by smaller new entrants to Indonesia's wheat milling sector as part of a "chaotic period".

Problems have receded slightly with Bogasari having purchased stocks of Bulog wheat and with the former government import monopoly having now left the wheat import trade entirely.

"Finished. Paid for. Gone. No more. Very, very happy," Welirang said of Bulog and its stocks, even though the former monopoly still had settlement problems with smaller mills.

Bogasari, now with a share of about 70 per cent of Indonesia's milling wheat market against almost 90 per cent before deregulation, plans to source 80 per cent of its wheat imports from Australia and Canada, with Australia having the greater share, Welirang said.

It is expected that Australia will have a 55-60 per cent share of Bogasari's purchases, Canada 25-30 per cent, the US 20 per cent, and others taking whatever share is left.

More wheat would be taken from Australia because of its proximity to Indonesia, Welirang said.

Political relations with Australia now posed no risk to the trade, in contrast to late last year when tensions over Australia's leading role in the international peacekeeping force in East Timor threatened to disrupt the Australia-Indonesia wheat trade.

-- Reuters