AN OVERVIEW OF THE INDONESIAN WHEAT FLOUR INDUSTRY By: Franciscus Welirang Chairman: APTINDO (Association of Flour Producers in Indonesia) Director: PT Indofood Sukses Makmur Tbk (Bogasari Flour Mills) Melbourne, July 25 27, 2011 AUSTRALIAN GRAINS INDUSTRY CONFERENCE
DEREGULATION OF THE INDONESIAN WHEAT FLOUR INDUSTRY (1998) AND WHEAT FLOUR INDUSTRY UPDATES 2
INDONESIAN FLOUR INDUSTRY DEREGULATION (1998) Flour deregulation has changed business paradigm and industry structure BULOG ERA Wheat Flour Trade was monopolized by the Board of Logistics (BULOG) Wheat Flour was produced only by companies appointed by the Government Agency Imports of Wheat Flour were banned POST BULOG Wheat Flour Industries are free to import and sell wheat flour The market is open to new products Wheat Flour import ban was lifted In 1998 2000, large imports raised suspicions i of dumping, under invoicing, illegal labeling and falsification of local brands. The Government set regulations to protect customers by imposing 5% import duty, SNI and labeling system 3
INDONESIAN WHEAT FLOUR MILLS LOCATION 4
INDONESIAN WHEAT FLOUR MILLS CAPACITY NO COMPANY LOCATION MT/Day CAPACITY MT/Year 1 PT ISM Bogasari Flour Mills Jakarta 9,340 2,802,000 2 PT ISM Bogasari Flour Mills Surabaya 5,120 1,536,000 3 PT Eastern Pearl Flour Mills Makassar 2,250 675,000 4 PT Sriboga Ratu Raya Semarang 1,400 420,000 5 PT Fugui Flour & Grain Indonesia Gresik 1,080 324,000 6 PT Pundi Kencana Cilegan 1,080 324,000 7 PT Pangan Mas Inti Persada Cilacap 1,000 300,000 8 PT Cerestar Flour Mills Cilegon 500 150,000 9 PT Berkat Indah Gemilang Tangerang 300 90,000 10 PT Halim Sari Gandum Medan 300 90,000 11 PT Lumbung Pangan Nasional Cibitung 300 90,000 12 PT Asia Raya Sidoarjo 110 33,000 13 PT Pakindo Jaya Perkasa Sidoarjo 110 33,000 14 PT Purnomo Sejati Sidoarjo 110 33,000 15 PT Jakaranatama Medan 75 22,500 TOTAL NATIONAL 23,075 6,922,500 5
INDONESIAN NEW FLOUR MILLS NO COMPANY LOCATION CAPACITY (MT/Year) 1 PTSari Pangan Makmur Sejahtera 2 PT Sarana Prima Makmur Sejahtera Medan 250,000 Palembang 250,000 Pontianak 198,000 Bangkalan 375,000 Serang 250,000 Banjarmasin 198,000 3 PTX?!! Medan Na 4 PT Bumi Alam Segar (BAS) Bekasi Na 5 PT Golden Grain Mills Cilegon Na 6 PT Tarlindo Makmur Abadi Na Na 7 PT Istana Kanya Na Na TOTAL >1,521,000 6
INDONESIAN WHEAT FLOUR CONSUMPTION 7
INDONESIAN WHEAT FLOUR CONSUMPTION SOURCES 2007 2008 2009 2010 000 % 000 MT % 000 MT % 000 MT % MT 2011 (up to June) 000 % MT Local Production Wheat Flour Import 3,384 85 2,997 85 3,325 84 3,631 82 1,954 86 581 15 531 15 645 16 776 18 323 14 Total 3, 965 100 3,528 100 3,970 100 4,407 100 2,277 100 Annualized Growth, in % INC (DEC) (11.01) 12.54 10.99 10.37 8
WHEAT FLOUR END USERS PROFILE SME 66% Small Medium Enterprises (SME) -Traditional management -Family-owned business -Community oriented, tradition-minded Bakery 22% Biscuit 4% Cake 2% Traditional Cake 6% Wet Noodle 9% Pancake 2% Big & Modern Industry 34% Pastry 1% Retailer 20% Big & Modern Industry -High-tech machinery -Professional management -Publicly-listed P l t d company
WHEAT PER CAPITA CONSUMPTION IN ASIAN COUNTRIES (Kg/capita/yr) Source: http://faostat.fao.org NO COUNTRIES 2007 1 Azerbaijan 219.91 2 United Arab Emirates 204.16 3 Turkmenistan 196.28 4 Turkey 191.03 5 Kazakhstan 178.57 6 Uzbekistan 174.06 7 Tajikistan 163.07 8 Georgia 160.44 9 Syrian Arab Republic 153.84 10 Iran (Islamic Republic of) 151.91 11 Kyrgyzstan 137.65 12 Jordan 135.03 13 Mongolia 115.06 14 Israel 113.84 15 Armenia 113.53 16 Lebanon 110.9 17 Pakistan 106.12 18 Occupied Palestinian Territory 104.65 19 Yemen 99.91 20 Saudi Arabia 94.03 NO COUNTRIES 2007 21 Kuwait 85.9 22 Cyprus 73.98 23 China 67.44 24 Malaysia 65.93 25 Maldives 65.54 26 India 60.2 27 Republic of Korea 50.79 28 Japan 44.56 29 Sri Lanka 44.11 30 Nepal 37.93 31 Brunei Darussalam 36.47 32 Indonesia 21.52 33 Philippines 18.73 34 Democratic People s Republic of Korea 18.48 35 Thailand 15.05 36 Vietnam 14.79 37 Bangladesh 14.7 38 Myanmar 5.55 39 Timor Leste 5.15 40 Cambodia 2.98 Indonesian Wheat consumption (kg/capita/yr:) 2007 = 21.5; 2010 = 24.8 (Source: APTINDO) 10
INDONESIAN WHEAT GRAIN IMPORT 11
WHEAT GRAIN IMPORTS TO INDONESIA, 2008 2011 NO COUNTRY OF ORIGIN 2008 2009 2010 2011 (up to May), in MT & % 1 Australia 1,757,280 39.2% 2,650,732 57.0% 3,159,131 66.0% 1,299,252 62.8% 2 Canada 1,258,755 28.1% 885,306 19.0% 758,313 15.8% 447,510 21.6% 3 United States 1,100,646 24.6% 602,059 12.9% 633,112 13.2% 288,709 14.0% 4 Russia 42,497 0.9% 283,385 6.1% 72,625 1.5% 0 0.0% 5 Lithuania 0 0.0% 0 0.0% 28,327 0.6% 205 0.0% 6 Ukraine 8,743 0.2% 178,679 3.8% 17,964 0.4% 224 0.0% 7 Brazil 8,054 0.2% 25,000 0.5% 0 0.0% 22,500 1.1% 8 Bulgaria 0 0.0% 22,900 0.5% 0 0.0% 0 0% 9 Singapore 0 0.0% 1,003 0.0% 0 0.0% 0 0% 10 Taiwan 0 0.0% 63 0.0% 0 0.0% 0 0% 11 China 172,358 3.8% 0 0.0% 0 0.0% 0 0% 12 Argentina 27,642 0.6% 0 0.0% 0 0.0% 0 0% 13 France 13,310 0.3% 0 0.0% 0 0.0% 0 0% 14 Vietnam 7,500 0.2% 0 0.0% 0 0.0% 0 0% TOTAL 4,478,383 100% 4,649,182 100% 4,786,590 100% 2,068,380 100.0% GROWTH, % 3.8% 3.0% 8.6% 12
WHEAT PRICE MOVEMENT IN INDONESIA (Source: BPS, 2011) TYPE OF WHEAT JAN FEB MAR APR MAY 20100 2011 MAY11 JUN AUG SEP OCT NOV DEC JAN FEB MAR APR MAY vs MAY 10 LOW PROTEIN 264 240 246 258 258 259 247 249 247 354 367 360 375 357 379 404 56.6% MEDIUM PROTEIN 274 274 275 275 275 275 260 260 317 376 367 384 332 374 395 421 53.1% HIGH PROTEIN 293 284 295 295 295 295 289 293 331 396 396 379 446 426 436 405 37.3% 13
INDONESIAN WHEAT FLOUR IMPORT 14
N O INDONESIAN WHEAT FLOUR IMPORT COUNTRY (2000 vs 2010) 2000 in MT 2010 in MT & in % 2010 vs 2000 1 Turkey 14,347 3.1% 454,768 58.6% 3069.8% 2 Sri Lanka 0 00% 0.0% 166,919 21.5% 3 Belgium 53,496 11.4% 58,905 7.6% 10.1% 4 Australia 53,761 11.5% 57,626 7.4% 7.2% 5 Japan 12,015 26% 2.6% 5,093 07% 0.7% (57.6%) 6 China 21,969 4.7% 374 0.0% (98.3%) 7 Others 313,477 66.8% 31,850 4.1% (89.8%) TOTAL 469,065 100.0% 775,534 100.0% 65.3% 15
INDONESIAN WHEAT FLOUR IMPORT (2008 2011) NO COUNTRY 2008 in MT & in % 2009 in MT & in % 2010 in MT & in % 2011 (up to May) 1 Turkey 227,472 42.8% 382,145 59.2% 454,768 58.6% 151,515 55.6% 2 Sri Lanka 61,067 11.5% 132,336 20.5% 166,919 21.5% 86,263 31.6% 3 Belgium 70,704 13.3% 76,371 11.8% 58,905 7.6% 12,688 4.7% 4 Australia 146,145 27.5% 42,245 6.5% 57,626 7.4% 5,469 2.0% 5 Japan 5,286 1.0% 5,566 0.9% 5,093 0.7% 2,341 0.9% 6 China 13,718 26% 2.6% 1,164164 02% 0.2% 374 00% 0.0% 0 0 7 Others 6,522 1.2% 5,183 0.8% 31,850 4.1% 14,440 5.3% TOTAL 530,914 100.0% 0% 645,009 100.0% 0% 775,534534 100.0% 0% 272,716716 100% Growth YoY, % 11.1% 21.5% 20.2% (2.9%) 16
IGC PRICE INDEX vs INDONESIAN FLOUR PRICE (2009 2010) 17
INDONESIAN EXPORT OF WHEAT FLOUR BASED PRODUCTS 18
EXPORT OF FLOUR BASED PRODUCTS (SOURCE: BPS) NO HS CODE PRODUCTS 2009 2010 GROWTH, % 10 / 09 1 1902301000 Instant Noodles 71,402,290 83,446,581 16.9 2 1902309000 Other StuffedPasta 19,411,072 21,422,231 10.4 3 1905100000 Crisp Bread 485,298 2,233,582 360.2 4 1905311000 Sweet Biscuits not containing Cocoa 8,095,676 24,493,452 202.5 5 1905311000 Sweet Biscuits containing Cocoa 19,603,094 25,453,167 29.8 6 1905320000 Waffles and Wafers 11,771,901 16,763,298 42.4 7 1905400000 Rusk, toasted Bread & similar toasted Products 140,018 148,372 6.0 8 1905901000 Unsweetened Teething Biscuits 1,666,924 2,972,337 78.3 9 1905902000 Other Unsweetened Biscuits 4,834,401 663,117 (86.3) 10 1905903000 Cakes 247,891 102,096 (58.8) 11 1905904000 Pastries 280,222 131,421 (53.1) 12 1905905000 Bakery products made without Flour 3,342 (100.0) 13 1905907000 Communion wafers, sealing wafers, rice paper and 15,153 33,903 123.7 14 1905908000 Other crisp savory Food products 748,875 558,789 (25.4) 15 1905909000 Other baker wares 10,633,893 11,407,920 7.3 A. QUANTITY in KGs TOTAL 149,340,050 189,830,266 27.1 19
EXPORT OF FLOUR BASED PRODUCTS (SOURCE: BPS) NO HS CODE PRODUCTS 2009 2010 GROWTH, % 10 / 09 1 1902301000 Instant Noodles 94,928,632 114,777,745 20.9 2 1902309000 Other StuffedPasta 16,869,759 18,370,328 8.9 3 1905100000 Crisp Bread 789,764 9,553,326 1,096.0 4 1905311000 Sweet Biscuits not containing Cocoa 22,197,522 55,697,367 150.9 5 1905311000 Sweet Biscuits containing Cocoa 47,435,428 58,208,419 22.7 6 1905320000 Waffles and Wafers 28,329,271 41,350,698 46.0 7 1905400000 Rusk, toasted Bread & similar toasted Products 436,154 361,796 (17.0) 8 1905901000 Unsweetened Teething Biscuits 3,417,852 5,780,066 69.1 9 1905902000 Other Unsweetened Biscuits 10,461,464 1,338,789 (87.2) 10 1905903000 Cakes 683,199 377,611 (44.7) 11 1905904000 Pastries 320,890 240,102 (25.2) 12 1905905000 Bakery products made without Flour 13,586 (100.0) 13 1905907000 Communion wafers, sealing wafers, rice paper and 50,613 112,102 121.5 14 1905908000 Other crisp savory Food products 1,341,028 967,814 (27.8) 15 1905909000 Other baker wares 20,575,942 22,023,544 7.0 B. VALUE in USD (FOB) TOTAL 247,860,104 329,159,707 32.8 20
ADDITIONAL NOTES THE MINISTER OF AGRICULTURE REGULATION No. 27/Permentan/PP.340/5/2009, REGARDING FOOD SAFETY CONTROL OVER THE IMPORT AND EXPORT OF FRESH FOOD OF PLANT ORIGIN (PSAT), to assure the imported fresh food of plant origin into the territory of Indonesia complies with the plant quarantine requirements and doesnotcontain chemicalcontaminants exceeding maximumlimitthusitissafe and consumable. (pesticide residues, mycotoxin and/or heavy metal contaminants) Dumping Import Duty (BMAD). After an in depth investigation of the Anti Dumping Committee of Indonesia (ADCI; Komite Antidumping Indonesia KADI) finally recommended the imposition of anti dumping import duties (ADID) to all exporters or producers of wheat flour from Turkey with ADID ranging from 19.67% 21.99% Indonesia Custom Tariff (Buku Tarif Bea Masuk Indonesia BTBMI), will be issued in 2012. There is anewhs Code for Wheat Grain (1001.99.), Wheat flour for food (1001.00.) & Wheat flour for feed (1001.00.). 21
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