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Why Indonesian Flour Milling Industry Will Expanding

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The Indonesian flour milling industry is expected to grow by 5% in 2016-17 due to the price competitiveness of wheat-flour based foods compared to rice and other staple foods, according to an Aug. 1 Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture.

The report said there are 31 operating mills in Indonesia as of 2017, with total installed capacity of 11.4 million tonnes wheat equivalent, an increase from 10.3 million tonnes in 2014-15. Running capacity of the mills reached 70% in 2015-16, and Bogasari, Indonesia’s largest flour mill, with a 52% share of the wheat flour market, is currently running at 85% capacity and is updating three flour mills located in Jakarta, it said.

Why Indonesian Flour Milling Industry Will Expanding

The report said that according to the Indonesian Flour Mills Association, total installed capacity of the country’s mills will reach approximately 14.2 million tonnes by 2024-25.

Other highlights from the GAIN report included the Indonesian Ministry of Agriculture saying it is targeting zero imports of corn for 2016-17, and is encouraging mills touse local corn to meet feed milling needs. Meteorlogical data indicates sustained rainfall in Lampung and Central Java, (two major corn production areas), enabling continued corn planting on rain-fed production areas. Although reports of downy mildew resulted in some production losses for second crop corn in 2016-17, officials expect that strong third crop cycle production will offset losses.

Indonesian wheat imports are estimated at 9.9 million tonnes for 2016-17, up from its previous estimate of 9 million tonnes.

“The change is due to incremental import increases based on feed mill demand,” the report noted. “In line with import increases, Post raises 2016-17 Indonesian wheat consumption for feed and residual use to 1.8 million tonnes, compared to the previous estimate of 1.2 million tonnes. The U.S. share of wheat exports to Indonesia is increased to 1 million tonnes in 2016-17 compared to 799,000 tonnes imported in 2015-16.”

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