Falling wheat supply will not affect flour industry

Falling wheat supply will not affect flour industry

P.C. Naommy, The Jakarta Post, Jakarta

The country's largest wheat flour producer, Bogasari Flour
Mills, expressed confidence in the future of domestic wheat flour
production despite increased competition for world wheat supplies
and rising transportation costs.

"The current price hike in the world's wheat market will not
affect flour production in Indonesia. In fact, production is
forecast to be higher than last year's since domestic demand is
estimated to increase from 5 percent to 10 percent this year,"
said company vice president Philip Purnama.

The firm, accounting for 70 percent of the country's flour
production, is a subsidiary of PT Indofood Sukses Makmur, the
world's largest instant noodle producer.

The world wheat price has increased by 20 percent to US$200
per ton over the past six months, following a decrease in
supplies as a result of harvest failures in China and India, and
a hike in transportation costs. Importing countries, including
Indonesia, are now scrambling to get sufficient supply of the
commodity.

Philip told The Jakarta Post on Saturday that despite thinner
supply in the world's wheat market, the company would still
increase its wheat imports this year.

"We have no choice but to increase imports to 4.3 million tons
this year, from last year's four million tons, to meet increasing
demand," said Philip, adding that the company would import from
the United States, Australia and Canada.

Philip said that there would be a price hike for wheat flour
and other wheat-based products, such as instant noodles produced
by Indofood, but declined to be specific.

He said only that the increase would be made in several stages
to prepare consumers for it.

Last month, the Indonesian Wheat and Flour Producers
Association (APTINDO) predicted that the price of wheat flour
would gradually increase by 18 percent during 2004, following the
rise in the price of wheat.

According to Philip, instant noodle production accounts for 20
percent of total consumption of wheat flour in Indonesia, which
reached 3,179 tons in 2003.

Anticipating the unexpected situation in the world's wheat
market, Bogasari is currently carrying out studies into the
possibility of developing flour from potential new sources, such
as cassava, corn and sweet potato.

According to Philip, the ongoing study is also aimed at
providing consumers with alternatives to wheat or rice flour
currently produced by the firm.

"We have also developed an instant food made from cassava,
based on Javanese tradition and known as tiwul, which entered the
Yogyakarta market in December 2003," said Philip, adding that the
new product had drawn a good response from the market so far.