The ongoing war in Ukraine has affected the supply of many raw materials for food production leading to a jump in prices of food products across the board in ASEAN countries.
One of the most important ingredient, wheat, which is used in the production of flour, bakery and noodles for instance, faces the brunt of the political instability as both Russia and Ukraine contributed 30% of the world’s exports of global wheat.
As a result, ASEAN countries are actively looking for alternative suppliers to make up for the shortfall. In Indonesia for example, flour mills are now looking to Australian wheat for back-up supplies.
Wheat prices were already at record levels before the war began and traders are betting the grain will become even more expensive. Indonesia, being Asia’s largest wheat importer, is now bracing for a knock-on effect onto food prices.
Fortunately, Indonesia’s flour mills still have plenty of wheat in stock for now but contingency planning is under way, said the Executive Director of the Indonesian Flour Producers’ Association, Ratna Sari Loppies. She said Australian wheat can fill in the demand however it is far more expensive than Ukrainian and Russian wheat.
In 2021, Indonesia imported 3.07 million metric tons of wheat from Ukraine and 2.955 million tons from Russia. Australia was the largest supplier with more than 4.6 million tons, just over 40% share of imports. Indonesia in recent years had been relying more on cheaper wheat sources from Russia and Ukraine, but this might change in the years to come. On the other hand, Australian wheat exporters are benefiting from a record harvest which make them able to boost supplies to meet overseas demands.
Apart from rising cost of wheat which affects prices of food products in Indonesia, other raw materials also see higher costs which include soybean and even cooking oil, despite the fact that Indonesia is the leading producer of palm oil. It is worth to note that the main staple diets of Indonesians include noodles, flour, tempe and tofu and all these require either wheat and soybean as the main raw material for production.
Indonesian food producers are now bracing up for the uncertain future and hope for price and supply stability which can only happen when the war is over.