National Post (Latest Edition)
Wheat becomes grain of choice in Indonesia
• For an increasing number of Indonesians, rice and noodles are no longer at the top of the menu. Bread is becoming a new food staple.
A voracious appetite for sandwiches and baked goods like cakes, pastries and doughnuts has turned the world’s fourth-most populous nation into the No. 2 importer of wheat. Consumption of the grain has doubled since 2002, quite a feat for a tropical archipelago that, unlike most other major buyers, grows none.
Baked goods are often just easier to eat than noodles or cooked rice at home. Their appeal has risen as the Indonesian economy more than tripled over a decade, boosting incomes for a middle class willing to pay more for fast, convenient meals. Consumption of bread and cakes jumped almost 60 per cent in the past four years, the Indonesia Bakery Association estimates. Dunkin’ Donuts Inc. has shops in more than 17 cities, and Krispy Kreme Doughnuts Inc. runs nine outlets in Jakarta alone.
“Sometimes, we get bored with rice and eating the regular Indonesian dishes,” Andy Bachtiar, a 35-year-old marketing supervisor, said as he chomped his way through a 70,000 rupiah (US$5.30) tuna sandwich for dinner with his wife and daughter at Raffel’s Sandwich shop near Jakarta. “We both work, so we need easy-to-eat food for breakfast or sometimes just for snacks.”
Over the past decade, Indonesia’s wheat imports surged 63 per cent to a record 7.7 million metric tons this year, while consumption jumped 70 per cent, far outpacing an eight per cent gain in rice demand that will reach an alltime high of 38.6 million tons in 2015, U.S. Department of Agriculture data show. Wheat imports will rise to 8.1 million tons next year. Demand has grown more slowly in Egypt, the top buyer, which will import 11.3 million tons in 20152016, the USDA estimates.
While global wheat inventories are around the highest ever after record harvests in 2014, increased demand from Indonesia may benefit the world’s top exporters, including the U.S. and Canada, and Australia, Indonesia’s main supplier.
“Th e r e’s still a lot of growth opportunity there,” said Jason Craig, general manager marketing and trading at CBH Group, Australia’s largest grain shipper.
The country also imports rice and corn to supplement domestic production, and President Joko Widodo has vowed the country will be able to boost output of those grains enough to be self sufficient by 2018. Even if he’s successful, Widodo won’t be able to ease Indonesia’s dependence on foreign wheat because the climate doesn’t suit its cultivation.
Pawan Kumar, an analyst at Rabobank International in Singapore, said Indonesia may import more than 10 million tons by 2020. Egypt may buy less as it reforms food subsidies, according to Amy Reynolds, an economist at the International Grains Council in London.
In five years, Indonesia, the Philippines and three other Southeast Asian Nations will probably buy a combined 40 per cent more wheat from Australia than now, or 13.2 million tons, said Greg Harvey, chief executive officer of Interflour Group.
Wheat traded in Chicago entered a bear market in January as world stockpiles of grains, excluding rice, headed for the highest level since the mid-1980s, according to estimates from the Grains Council. Futures were down 22 per cent in the past year to US$5.175 a bushel on Thursday.
Sales of bread, cakes and pastries may rise to 688,000 tons in 2019 from 560,400 tons in 2014 and 429,700 tons in 2009, Euromonitor said in a March report. Consumption of all baked items grew to 1.75 million tons in 2014 from 1.1 million in 2010, based on the amount of wheat flour consumed by the industry, said Chris Hadijaya, head of the bakery association.
Indonesians also eat more instant noodles than anyone except South Koreans and Vietnamese, devouring 53 packets per person last year, according to the World Instant Noodles Association in Tokyo. In China, the world’s most populous country, demand was 33 packets per person, the data show.
The noodle industry used 70 per cent of the nation’s wheat flour last year, while bakeries consumed 20 per cent and the rest was split between homes and commercial biscuit makers, the USDA’s Foreign Agricultural Service wrote in an April 1 report.
Sometimes, we get bored with rice and eating (traditional) dishes