PERTH, AUSTRALIA — Unable to import its normal amount of wheat from drought-plagued Australia, Indonesian flour millers have turned to the Black Sea region as an alternative source, according to the Indonesian Flour Millers Association (IFMA).
During a grain industry conference on Oct. 2, the IFMA said bleaching agents and other chemicals are being added to Indonesian noodles to make them look like they are made from Australian wheat. Noodle makers have faced a backlash from consumers unhappy with their product, according to a report in the Financial Review. Consumers have complained about the dull and darker color of the noodles made without Australian wheat, which typically produces a natural bright yellow color.
Australian wheat exports to Indonesia this year are 75% below the five-year average, according to the IFMA, while imports from the Black Sea region jumped by 150% to 1.73 million tonnes during the six-month period ended June 30.
Erwin Sudharma, deputy director of Bogasari Flour Mills and IFMA representative, told the Financial Review the plunge in imports was due to a prolonged drought in Australia that has limited supply and increased prices. He said the supply shortages are projected to continue into next year with Australia forecast to produce 17 million tonnes. Typically, the country harvests around 25 million tonnes per year.
Indonesia is highly dependent on wheat imports to help feed its large population. According to the International Grains Council (IGC), the Southeast Asian country’s wheat production for 2019-20 is forecast at 13.3 million tonnes, while imports are projected at 11.7 million tonnes.
In an annual report on the sector, the USDA attaché in Indonesia stressed the country’s total reliance on imports of wheat for food and feed.
“Currently, 28 flour mills operate under 23 companies, with a total installed capacity of 11.8 million tonnes (wheat equivalent) per annum, an increase from 11.5 million tonnes in 2017-18,” the report said. “Running capacity of the mills reached 80% in 2017-18, an increase from 70% in 2016-17.”
Indonesia’s imports of wheat for food are inflated by a ban on imports of corn for food. The country has some of the highest corn prices in the world, so feed mills are forced to source other commodities for feed ingredients.
Expansion in the flour milling sector, leading to strong competition also has meant a rise in imports of wheat from the Black Sea. According to the attaché, Australia, with 31%, and Ukraine, with 21%, dominate the market. Canada has a market share of 16% and Russia has 14%.
“The growth of Ukrainian wheat imports, along with the sharp increase in Russian imports, has pushed U.S. wheat to fifth largest supplier, although overall market share has remained near 10%,” the attaché said. “Australia’s market share is due to the growing noodle industry’s preference for Australian standard white wheat, competitive pricing, and Australia’s close proximity.”