Bogasari claims oversupply of flour
JAKARTA (JP): PT Bogasari Flour Mills, which dominates the country's flour industry, claims that up to 60 percent of its flour stock belongs to buyers that have yet to collect their delivery orders.
The factory manager of Bogasari's Surabaya (East Java) plant, Ali Putra Gunawan, said yesterday the company would be "more than happy" if the buyers collected their goods to help Bogasari make room for new stock.
He rejected allegations that Bogasari's oversupply of nearly 8,000 tons is the result of hoarding practices and speculation. Ali insisted that the stock had nothing to do with the recent increase in flour prices.
The National Logistics Agency (Bulog) announced earlier this month that it was raising the flour price to Rp 700.42 (US$0.30) from Rp 677.98 per kilogram due to increasing wheat prices on the world market. The new price went into effect this month.
Bulog, established to stabilize prices of sensitive foodstuffs, said that world wheat prices have increased to between $250 and $280 per ton from around $180 in 1994.
Most of Bulog's wheat is processed by privately-owned Bogasari, an affiliate of the well-diversified Salim Group.
Although the flour price has been raised, Bulog said that it would not change its wheat prices -- paid by Bogasari -- nor its wheat-processing fees -- which are paid to Bogasari.
Ali said yesterday that the company's oversupply has increased its total stock to 28,000 tons. Bogasari's normal stocks reach 20,000 tons.
He explained that the situation has forced Bogasari to cut back on production by up to 1,000 tons, from the normal capacity of 4,400 tons a day.
"We have been cutting back on production since about two weeks ago and this may continue for about one or two weeks," he told The Jakarta Post.
He said that there were regular fluctuations in demand every year around June and July. However, he admitted this year was "rather remarkable", as demand levels dropped by 10 percent compared to the regular June-July decline.
He said that after Bogasari cuts down its stocks to around 22,000 to 25,000 tons, production levels would be brought back up to the normal capacity.
Ali said buyers often leave their delivery orders in Bogasari's warehouses to cut down on costs and risks. (pwn)