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  • Unconventional Ag

Wheat Becomes Grain of Choice in Indonesia

The increasing popularity of food items such as baked goods and sandwiches has caused wheat to gain on rice and noodles, becoming a new food staple in Indonesia.

This growing demand from one of the world’s most populous and dynamic economies could prove a boon for the world’s top wheat producing countries including the U.S., Canada, and Australia, after record crops in 2014 resulted in record world inventories. Although Indonesia is targeting self-sufficiency in rice and corn production by 2018, the country’s dependence on wheat imports will certainly continue as its climate is not conducive to wheat production.

Consumption of wheat in the world’s fourth most populous nation has doubled since 2002, making Indonesia the world’s second biggest importer. The Indonesian economy has tripled over the past decade, creating a middle class now able to pay for convenience foods – lifting the appeal of easy-to-eat baked goods, sandwiches, and pastries over cooked noodles or rice at home. Consumption of bread and cakes in Indonesia increased 60% over the past four years according to the Indonesia

Bakery Association, with sales of bread, cakes, and pastries expected to rise to 688,000 tons by 2019 – up from 560,400 tons in 2014, and 429,700 tons in 2009 according to a March report released by Euromonitor. Reflecting this data, Dunkin Donuts Inc. now has locations in 17 Indonesian cities, and Krispy Kreme Dougnuts Inc. has nine locations in Jakarta alone.

Over the past decade Indonesia’s wheat imports climbed 63% to a record 7.7 million tons, with imports forecast to continue increasing to 8.1 million tons this year, compared to an increase in rice demand of only 8%, reaching a record high of 38.6 million tons in 2015 according to the U.S. Department of Agriculture (USDA).

Indonesia is estimated to be importing more than 10 million tons of wheat per year by 2020 according to Rabobank International in Singapore, and in five years, Indonesia, the Philippines, and three additional Southeast Asian nations are forecast to increase their Australian wheat purchases by 40% to 13.2 million tons annually, according to Greg Harvey, chief executive of Interflour Group.

Indonesia is also the third largest consumer of instant noodles behind only South Korea and Vietnam eating 53 packets per person in 2014 according to the World Instant Noodles Association based in Tokyo. To satisfy this demand, the instant noodle industry used 70% of the country’s flour supply last year, while bakeries consumed 20%, and commercial biscuit producers and home users accounted for the remaining supply according to the USDA’s Foreign Agricultural Service’s April 1 report, indicating the growth potential for the baked good industry in the country.

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