Indonesia wheat imports to rise 6-7 percent in 2013 on flour tariff

Amira sells basmati rice, a premium long-grain rice grown only in certain regions of the Indian sub-continent, under the brand ‘Amira’ as well as under other third party brands.Jakarta — Indonesia’s wheat imports are expected to rise 6-7 percent next year, an industry group said, after Asia’s largest importer of the grain prepares to slap a 20-percent import tariff on wheat flour.

In a filing to the World Trade Organization published earlier this month, Indonesia imposed a 20 percent emergency tariff on wheat flour imports for 200 days to shield domestic mills from a surge of competition from foreign flour.

The WTO move came one month after the Indonesian Wheat Flour Mills Association (APTINDO) told Reuters that an import tariff was due to be introduced.

“Our national wheat flour output next must increase because of the wheat flour safeguard duty,” Franciscus Welirang, chairman of APTINDO said late on Monday. “For next year I predict (wheat imports) will grow 6-7 percent.”

Southeast Asia’s largest economy used more than 6 million tonnes of wheat in 2011, including imports of about 5.5 million tonnes of the grain and about 680,000 tonnes of wheat flour.

Analysts have warned that cuts in wheat flour imports could stoke inflation, especially at a time when the government has imposed greater curbs on beef imports despite rising prices.

Welirang reiterated his previous forecast that wheat consumption would rise by 7 percent in 2012, which would mean an increase to about 6.4 million tonnes.

Southeast Asia’s largest economy is expected to grow by more than 6 percent this year, and this wealth is changing consumer tastes towards more bread and noodles.

A sign of increasing demand for wheat flour is the rising number of domestic flour millers, which number 20 and have installed capacity of 7.9 million tonnes.

The archipelago imports all of its wheat, both unprocessed grains and flour, which is largely used to make noodles, bread, cakes, biscuits and convenience snacks.

Australia supplies almost 70 percent of Indonesia’s imports of wheat, with Canada and the United States largely making up the rest.

Turkey is the largest exporter of wheat flour to Indonesia, accounting for about 60 percent of the country’s imports, with Sri Lanka making up around 30 percent and Belgium, Australia, Japan and Ukraine often supplying the rest.

Turkey, the largest exporter of wheat flour in the world, says its shipments to Indonesia will fall nearly 40 percent this year and has been lobbying against import tariffs.

Despite the WTO notice, Bachrul Chairi, head of the trade policy assessment agency at the Trade Ministry, said the wheat flour tariff had yet to be introduced and was currently being handled by the Finance Ministry.

“According to WTO rules and regulations, before imposing a temporary safeguard duty, a country has to notify the WTO,” said Chairi.

“It will not be too long to be issued because it has been 10 days since trade minister sent the proposal letter on the temporary safeguard duty to the finance minister.”

Reuters

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