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Indonesia's 2015 wheat imports seen flat as economy flags

Published 06/10/2015, 09:28 pm
Updated 06/10/2015, 09:38 pm
© Reuters.  Indonesia's 2015 wheat imports seen flat as economy flags
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By Michael Taylor

JAKARTA, Oct 6 (Reuters) - Indonesia's wheat imports for 2015 will be lower than forecast at 7.4 million tonnes, flat to the previous year, the head of an industry group in the world's No.2 importer of the grain said on Tuesday, as consumers cut spending as the economy slows.

Earlier, Franciscus Welirang, chairman of the Indonesian Wheat Flour Mills Association (APTINDO) estimated Indonesia's 2015 wheat buys at 7.8 million tonnes.

With Indonesia's second-quarter growth at 4.67 percent, the slowest pace since 2009, Welirang told Reuters that wheat imports for the year would be the same as in 2014 as consumers watch what they spend.

"I see it almost the same as last year," said Welirang. "It is an indicator of the economic slowdown," he said, although adding that imports would rise 5 percent in 2016 as the economy picked up again.

In the first half of 2015, Indonesia imported 3.6 million tonnes of wheat, he said.

"We will see in the third quarter that there is an increase in consumption of 1 percent compared with last year," he said, noting that the annual average increase over the past 20 years is 5 percent.

Indonesia's economy has grown at an average annual rate of more than 6 percent since the end of the Asian financial crisis, and the country's rising middle class has in recent years underpinned the country's growing appetite for Western fast foods such as McDonald's (NYSE:MCD), Dunkin' Donuts and Pizza Hut.

The Southeast Asian nation imports all of its wheat, with about 70 percent shipped from Australia. Canada and the United States are the other key suppliers.

Bakeries contribute just over 20 percent of Indonesia's wheat demand, with instant noodles accounting for 34 percent, said Welirang, who is also a director at the world's biggest noodle maker, Indofood Sukses Makmur INDF.JK .

Indonesia also imports wheat flour but volumes have fallen in recent years due to an ongoing trade disputes with top suppliers Turkey, Sri Lanka and India.

Wheat flour shipments were just 48,000 tonnes during the first half of the year, Welirang said, compared with 197,000 tonnes for the whole of 2014.

There are a total 29 wheat flour mills in Indonesia with a capacity of 11.2 million tonnes, he said, with the number set to rise to 31 by the first quarter of 2016.

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