In the global flour milling industry, there has always been a certain mystique about P.T. Bogasari Flour Mills’ mammoth mill in Jakarta, Indonesia. Recognized as the world’s largest flour milling facility for many years in terms of both milling capacity and physical size, it stands as a monument to the growing importance of flour-based products in that heavily populated country as well as the greater Asia region.
This recent surge in popularity of wheat flour-based products prompted Bogasari officials to authorize yet another expansion of the plant.
The mill, which has 15 milling lines (yes, 15), recently expanded its “I” and “J” milling lines, with production capacity in each line increasing from 800 tonnes (wheat equivalent) per day to 1,200 tonnes per day. Capacity in the “H” mill is in the process of being expanded from 800 to 1,200 tonnes, with the expansion expected to be completed in the third quarter of 2019. When the final piece of equipment is installed, the plant’s daily capacity will reach 11,650 tonnes and its yearly production capacity will be more than 4 million tonnes.
The world’s largest flour mill needed to get bigger to meet consumer demand, said Franciscus “Franky” Welirang, director of PT Indofood Sukses Makmur, with responsibility for Bogasari’s milling division, in an interview with World Grain.
“Indonesia’s flour market is growing,” Welirang said. “The average 10-years growth is 5% per annum, mostly due to population growth, changes in eating habits and the growth of the middle-income class.”
According to a recent Global Agricultural Information Network report from the U.S. Department of Agriculture, relatively stable macro-economic conditions in Indonesia have allowed middle and upper-middle income consumers to diversify their diets to include more western-style foods like bread and pasta.
“Rather than eating rice three times daily, many Indonesians have switched to eating bread or noodles for breakfast,” the USDA said. “Restaurants are also driving demand for wheat-based food products. The number of high-end bakeries is also growing, mainly in major cities, including Jakarta, Surabaya, Medan, and Bandung.”
Welirang, who is also president of APTINDO, the Indonesian flour milling association, said wheat consumption in Indonesia is currently 8.5 million tonnes but is expected to jump to 11 million tonnes annually by 2020. While rice still dominates as a staple food in Indonesia with annual consumption at more than 100 kilograms per capita, wheat flour consumption has risen to 23 kilograms per capita.
Keeping pace with demand
To keep pace, the company’s flour production capacity also has grown 5% in the last 10 years, Welirang said. In addition to the Jakarta expansion, Bogasari is building a new mill in Cibitung, which will include two existing and two new milling lines with total capacity of 2,600 tonnes per day. It also has a mill in Surabaya with eight lines totaling 6,150 tonnes of daily capacity and a mill in Tangerang with two lines and 200 tonnes per day capacity.
Bogasari became part of the Indofood group in 1995 and produces a range of flour products sold under brands such as Cakra Kembar, Segitiga Biru, Kunci Biru, and Lencana Merah. The company also produces pasta for both domestic and export markets under the La Fonte brand.
“There are five main flours produced with a total of more than 50 SKUs, differentiated by protein, ash and specialized flour,” Welirang said.
Bogasari’s primary flour customers are the Small Medium Enterprises (SMEs), which comprise about 66% of the Indonesian market, Welirang said. The list of larger customers includes Indofood, which acquires its flour (22% of Bogasari’s total flour production) from its subsidiary, as well as Mayora, Nippon Indosari, Nabisco, Monde and others. The export market accounts for less than 5% of the company’s flour output, Welirang said.
“Based on the volume, both (large and small flour end users) are growing,” Welirang said.
Bogasari, which employs 2,300 workers at its milling plants, is by far the biggest flour miller in Indonesia and has a market share of 50%, according to Welirang. While it is still dominant, its market share has dropped a bit since 2006, when it was reported at nearly 70%.
Indonesia has 28 flour milling companies that have a production capacity of 11.8 million tonnes of flour (grain equivalent), Welirang said, noting that actual flour production in 2018 is expected to be around 6.4 million tonnes.
“The total capacity nowadays is more than the market needs,” Welirang said. “The national average utilization is 70%.”
He noted that the country’s milling market has become far more competitive since deregulation in 1998, when the country had just five flour mills, but that the competition is good for Bogasari and the country’s milling industry in general.
“Bogasari differentiates its products by having consistent quality, natural, pure wheat flour and also with availability by having a strong distribution network and services,” Welirang said. “The brand of Bogasari flour is very strong.”
The mill in Jakarta, as well as Bogasari’s other milling plants, typically receives wheat imports from three countries: Australia – its primary supplier – as well as the United States and Canada. However, the recent drought in Australia has forced Bogasari to also bring in wheat from the Black Sea region, Welirang said.
Bogasari’s operations are supported by a maritime unit of five post panamax and five handy/supramax vessels, which are used to transport wheat from those countries.
Retrofitting the mill
For the expansion of the Jakarta facility, Bogasari turned to Ocrim SpA, the Cremona, Italy, milling equipment manufacturer that has been involved in various expansions of the Jakarta mill since it opened more than 40 years ago.
One of the challenges was increasing capacity without expanding the physical size of the mill. To do this. the wheat cleaning and milling sections of the milling lines were retrofitted with latest-generation equipment from Ocrim.
“To achieve the desired results it was necessary to reinforce the civil structure of the building due to additional loads, integrating the building with an additional floor to exploit as much as possible the concept of energy savings applied to the entire plant,” Ocrim said. “Moreover, with a very innovative and efficient diagram, it has been possible to implement Ocrim’s latest-generation double-deck roller mills, used in an optimal way to obtain an excellent final product, and to apply a modular plansifter with 10 channels also for a concrete optimization of the space.”
The sifters feature an automatic sieve press to guarantee ease of operation and reduced maintenance times. Ocrim’s automation department equipped the three lines with @rollermills software that allows mill operators to control the mills remotely via tablet and then to program them with a single operation carried out any place in the mill.
“Since the operator is no longer required to act on the roller mill onboard control, it almost completely cuts down the setting time of the entire line and is also innovative for safety purposes, because, despite running on Wi-Fi, it guarantees a secure protection from external agents,” Ocrim said.
The new equipment is made of stainless steel to guarantee the best product quality and safety, Welirang said.
“The new milling lines are equipped with the latest state-of-the-art technology, ready for implementation of 4.0 (a term that refers to the fourth industrial revolution in engineering and manufacturing that is being implemented in Indonesia) with all the important features of product safety and energy savings,” Welirang said.
He noted that having both state-of-the-art equipment and knowledgeable millers are essential to run a mill the size of the Jakarta plant.
“The most important factor is having good millers,” he said. “And for sure, the automation system, the smart sensors, online control and all the IOT (Internet of Things) will help the millers operate the mill in a good and efficient manner.”
The company operates an in-house packaging unit that produces degradable polypropylene bags to support its packaging requirements.
About 85% of the flour produced at the Jakarta mill is packed in 0.5-kg, 1-kg, 2-kg and 5-kg packs, 25-kg bags and 750-kg jumbo bags, which are then transported by trucks and railcars. The remaining 15% of the flour is transported in bulk, Welirang said.
For exported flour, Bogasari uses the Jakarta and Surabaya state port facilities, but it does have its own ports for exporting wheat bran pellets in bulk, he said.
Welirang noted that as part of the expansion at the Jakarta plant, Bogasari plans to install an additional 36,000 tonnes of wheat storage capacity to cover the mill’s needs for high, medium and low-protein wheat.
Potential for more expansion
Welirang said among the biggest challenges facing milling companies in Indonesia is transporting finished products as the country is composed of five large islands and more than 15,000 smaller ones.
“Bogasari has 26 warehouses to cover the distribution in all of Indonesia,” he said. “Close collaboration with shipping companies is very important.”
The company is strategizing about how to expand its output, specifically in Eastern Indonesia, where economic development is less advanced and transporting product to that area is difficult due to its remoteness.
In a 2015 interview with World Grain, Welirang discussed potential strategies for this market.
“One option is to build a new mill for Eastern Indonesia,” he said. “That would be a challenge, and it depends on economic development, but this could be located somewhere in Papua. It’s a possibility. We would then use the international port in Sorong. From a mill there, we would import wheat in bulk and ship out in containers.”
Depending on market growth in that region, Welirang said such a development could occur in the next 10 years.
In that same interview, Welirang noted that greater opportunities also exist in the Southeast Asia export markets where the milling industries were not as strong asIndonesia.
“We need better port facilities so we can export processed flour-based products to Southeast Asia,” Welirang said. “We, as an industry, are doing that already and total exports of wheat flour, byproducts and wheat flour-based products have grown in value to $755 million, and in the next few years this will reach $1 billion. So we are a very important industry for the economy, and exports will play a growing role in this in the future.”