Rising Wheat Imports in Indonesia: Balancing Dependency, Security, and Sustainability
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Indonesian wheat imports are rising in 2023-2024. This is expected following the recent decline of wheat imports in 2022-2023 caused by global economic slowdown. As a consequence, imports of cereals such as wheat and muesli reached as far as 9,47 million tonnes in volume – a slight increase of 0,747 million tonnes compared to last year — despite a decline towards $3,34B in values. The declines are a result of changes in price of cereals as a consequence of global economic slowdown.
However, the changes within Indonesian wheat imports reveals an overall upward trend in the cereal imports. This could have consequences of increasing dependence on cereals such as wheat and mueslis. Upon 2018 to 2022, trends on cereal imports showed an upward trend of 5,66%. By 2023, wheat imports share 3,2% of overall imports. (Ministry of Trade, 2023).
One of the causes of an upward trend of wheat imports are the increasing domestic consumption of wheat and its derivatives. The increasing consumption contributes as a sign of increasing demand for wheat imports. Based on data from USDA, the domestic consumption of wheat and its products in Indonesia has doubled since 2008.
Such a driver is an increasing Indonesian urban-middle class and a high price of rice which despite being domestically produced, failed to satisfy the needs of the populations. This is also a sign of changes in diet, especially within urban populations with ready to eat food such as instant noodles and bread has been the dominant staple for Indonesians.
From as far as the 1970s, processed wheat-based food has become more popular in Indonesia. This has a history of US humanitarian food assistance in the 1960s in the form of grain assistance. By the time the assistance ended, Indonesia had built itself a wheat processing facility. For its flexibility, practicality, and durability in consumption, Wheat-based processed food has been popular in the form of instant noodles, bread, cakes, and pasta. Most popular is instant noodle, which Indonesia is the second biggest market for, and the home for largest instant noodle producer, Indofood Sukses Makmur.
This can be viewed in a positive aspect since increasing domestic consumption of wheat products can support a wheat processing industry. This is showed by the cereal processing product export that is rising consistently since 2018 with an 8,87% increase between 2018-2022 (Ministry of Trade, 2022). Based on the data from Association of Wheat Flour Producers, exports of flour from Indonesia have reached Rp 8,7T in value.
Despite the added value that we absorb from the wheat processing industry, there is still a question of our food security. The rising dependence of wheat can also cause some problems for the sustainability of our food system. Recent shift in the dietary system away from rice, which has been in our culture for decades and which Indonesia is endowed with its abundance, could spell harm for our national food security prospects.
Indonesia’s import of cereals mainly came from Australia ($1.36B), Ukraine ($640M), Canada ($516M), Argentina ($132M), and the United States ($96.5M) (OEC, 2021). Such sources are very prone to geopolitical instability. Recently, the Russia-Ukrainian conflict reveals how geopolitical instability could directly affect not only Indonesia, but also on a global scale. Although Indonesia has managed to avert such risk, the problem remains.
The danger of a climate crisis that is exacerbating El Nino could also cast some risk. El Nino is a climate pattern that could have an effect of drought to the Southern Hemisphere. This could have an effect of reduced crops especially in the breadbasket of the Southern Hemisphere, namely Australia and Southern America. This explanation helps us understand not only the recent changes of food prices, but also the risk that it possesses.
The question that remains is what to do with the state of our dependency towards wheat today? The Indonesian government had laid out plans to secure strategic food. President Joko Widodo has assigned the Ministry of Defense to clear up lands to build strategic food reserves. In the context of the recent presidential election the plans are likely to continue since the Ministry of Defense, Prabowo has won the election on the platform of continuity. Furthermore, there are plans laid out by Prabowo to impose a heavy tax for wheat and wheat products, with a hope to reverse the current trend of shifting food staples.
Will his plan ensure sustainability for the national food system? We have yet to know exactly. However, we need to have a clear cut and comprehensive plan to secure our food system. In the meantime, we must also search for alternatives to replace wheat products and diversify our food staple.