Indonesian flour market seen growing

by Eric Schroeder
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Total installed capacity of Indonesian flour mills forecast to reach approximately 14.2 million tonnes by the 2024-25 marketing year.
Photo by Adobe Stock.
 
WASHINGTON, D.C., U.S. — The flour milling industry in Indonesia is expected to increase 5% in the 2016-17 marketing year, reflecting price competitiveness of wheat flour-based foods compared with rice and other staple foods, according to a March 30 report from the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA).

 

Citing data from the Indonesian Flour Mills Association, the USDA said only five flour mills belonging to four companies in the country operated between 1970 and 1998. Today, there are 31 operational flour mills with a total installed capacity of 11.4 million tonnes, up from a capacity of 10.3 million tonnes in the 2014-15 marketing year, according to the USDA.

The USDA said most of the flour mills in Indonesia are located in Java, and in the 2015-16 marketing year running capacity of the mills reached 70%. By comparison, PT Bogasari Flour Mills, which is Indonesia’s largest flour milling company with a 52% share of the wheat flour market, is running at 85% capacity, the USDA said, and the company plans to update three of its flour mills located in Jakarta.

The Indonesian Flour Mills Association has projected that the total installed capacity of Indonesian flour mills will reach approximately 14.2 million tonnes by the 2024-25 marketing year, the USDA noted in its report.

“Flour production costs have increased as Indonesian electricity and labor costs have risen,” the USDA said. “This is exacerbated by the weak Indonesian rupiah. Exchange rates have been somewhat offset by abundant wheat supplies in the international market.” 

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