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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

04 November 2013

USDA GAIN: Indonesia Grain and Feed Update October 2013USDA GAIN: Indonesia Grain and Feed Update October 2013

Indonesian wheat PSD estimates are unchanged, with the exception of MY 2012/13 imports, which are revised from 6.9 to 7.146 MMT based on recent trade data. Post PSD estimates for corn and rice remain unchanged. Higher than usual rainfall during the dry season contributed to higher corn plantings in July 2013. Rice production is expected to reach a record 59 MMT in MY2013/14 due to the adoption of new, higher yielding varieties. Official weather forecasts expect an earlier rainy season in 56.1 percent of planting areas and above normal rainfall in 37.4 percent of planting areas.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed



Executive Summary:

Situation and Outlook

Indonesia’s major food crops growing areas are characterized by a wet season that runs approximately October to April, and a dry season that runs May through September. Three harvests are typically carried out in a year. The 2012/13 dry season has been marked by rain, similar to the 2009 and 2010 seasons. As a result, rain-fed areas experienced stronger corn plantings during the dry season, especially during the third crop cycle which starts in July. Looking to the 2013/14 season, the Indonesian Meteorology, Climatology, and Geophysics Agency (Badan Meteorologi, Klimatologi, dan Geofisika, BMKG) has forecast that 20.8 percent of planting area will experience a start to the rainy season in September, 35.1 percent in October, and 28.7 percent in November. Compared to the 30 year average, the rainy season will arrive early in 56.1 percent of Indonesian planting areas and on time in 31.3 percent of planting areas. BMKG is forecasting normal rainfall intensity in 56.1 percent of planting area and above normal rainfall intensity in 37.4 percent of planting areas.

On July 10, 2013, Indonesian Ministry of Public Works reported that the condition of water elevation at 11 water reservoirs was normal, while 5 water reservoirs was in alert condition. (See Table 2 for more information).


Indonesian wheat PSD estimates are unchanged, with the exception of MY 2012/13 imports, which are revised from 6.9 to 7.146 MMT based on recent trade data. MY2013/14 imports are forecast at 7.2 MMT.

Wheat consumption remains stable despite a weakening exchange rate. In July 2013, the Indonesian Rupiah fell below Rp. 10,000/$1. The Center of Market Information, Ministry of Trade, reports that the average retail price of “Segitiga Biru,” a common wheat flour variety, increased from Rp. 7,575/kg in July to Rp. 7,775/kg in September. The Indonesian Bakery Entrepreneurs Association (APEBI) also attributes a 10 percent bread price increase since early September 2013 to the weakening rupiah. Indonesian flour millers report that they are passing price increases on to consumers.

Higher wheat prices have constrained wheat consumption growth. The Indonesian Flour Mills Association (APTINDO) reports that 2012/13 growth was closer to 7 percent, while 2013/14 growth is likely to fall. Growth will likely slow in the bakery segment. Demand for noodle is more inelastic, and will help support overall wheat flour consumption.


Production: Post estimates for Indonesian corn remain unchanged at 8.5 MMT. During recent crop travel in east Java and Sumatra, local growers indicated that they will plant corn in place of rice when rainfall is less. Although major planting areas experienced a rainy season that extended into late July/early August, rainfall was lower than forecast, resulting in corn planting that was greater than expected at the beginning of the year. Looking to 2013/14, growers are indicating the intention to plant more hybrid corn. These intentions, coupled with a lack of any significant pest or disease problems will continue to push up corn production in 2013/14, with current estimates set at 9.2 MMT. In addition to competition between corn and rice, Post will continue to observe farmer planting decisions between corn and cassava. Cassava planting competes directly with corn in southern Sumatra (Lampung- Indonesia’s third largest corn production area). Lampung is home to five cassava plants and four feed mills, and competition between the two may lead to significant production shifts in southern Sumatra.

In October 2013, the Indonesian Ministry of Agriculture (MOA) introduced a new program to facilitate agricultural loans. The program is intended to provide farmers with financing in order to help increase corn production, with a particular focus on Banda Aceh, North Sulawesi, Central Sulawesi, Southeast Sulawesi, East Nusa Tenggara, West Nusa Tenggara, and East Java provinces. Post will observe the program and report if it leads to significant production changes.

Trade: Post maintains 2012/13 corn imports at 2.7 MMT. This is supported by the Indonesian Feed Mills Association (GPMT), which reports that Indonesia imported a total of 2.1 MMT of corn during the October-July 2013 period. Slightly lower corn production combined with higher feed mills production capacity are expected to maintain robust MY2012/13 Indonesian corn imports. 2103/14 imports remain at 2.2 MMT based on strong domestic production.

Rice, Milled

Production: Post forecasts 2013/14 rice production at a record 59 MMT. Record production is attributable to adoption of new, higher yielding varieties. 2012/13 production remains at 57 MMT. BMKG forecasts the rainy season to arrive in most planting areas starting in mid October- November. As a result, most rice plantings on Java are expected for late October/early November, 2013. Some plantings in Central Java and Southern Sumatera are expected to be delayed into November due to limited rainfall, while farmers in the Bengawan Solo River region in East Java were able to start plantings in mid October. Given this timing, Indonesia’s first main harvest, which contributes between 55 and 60 percent of total national paddy production is expected to take place between February and April 2014.

The Ministry of Agriculture and the Agriculture Commission of the Indonesian House of Representatives are reported to be considering a Presidential Decree that would permit the distribution of subsidized planting seed. Under the Decree, the Ministry of Agriculture will assign a state-owned company to manufacture and distribute rice seed. The Decree has not yet been signed and is thus not implemented.

Trade: Indonesia is expected to import 1 MMT of rice in 2012/13 and 1.5 MMT in 2013/14. Indonesian regulations only permit the Indonesian logistics agency (BULOG) to import medium grain staple rice. Private importers are allowed to import specialty rice such as japonica, basmati, etc. Imports are tied directly to BULOG’s ability to procure sufficient quantities of domestically produced rice at state prices. In 2012/13, BULOG‘s procurement target is 3.2 MMT. They are equally required to hold 2 MMT in stocks by the end of the year. As of October 2013, BULOG had achieved its procurement goal and held 2.7 MMT of stocks. Given these factors, it is unlikely that BULOG will require high imports in 2012/13. Imports remain at 1 MMT, the majority of which is specialty rice. As of July 2013, specialty imports had reached 430,000 MT. There is still uncertainty over 2014 rice imports, which are currently set at 1.5 MMT. While political considerations during an election year may drive down imports, this could be offset by low ending stocks.

Source: Cipinang wholesale rice market, The Rice Trader.

Consumption: Indonesia is the 4th most populous nation in the world with a population of roughly 240 million people. Over 50 percent of the population is between the ages of 5 - 34 years. While up and coming segments of the population are driving up consumption of basic staples, the emerging middle class supports the expansion of specialty rice imports. As a result, 2012/13 rice consumption is stable over the 2011/12 year at 39.55 MMT, while 2013/14 has expanded slightly to 39.8 MMT in response to population growth.

The GOI increased the 2012/13 total rice allocation for the rice for the poor program (raskin) to 3.5 MMT. This decision was taken partly to offset increased fuel prices. Under raskin, rice will be distributed to over 15 million families at the subsidized rate of Rp. 1,600/kg. Each family will be entitled to 15 kg of rice per month over a 15 month period. As of mid October 2013, BULOG distributed 2.8 MMT of rice through the raskin program. BULOG also sold 99,000 MT of rice on the commercial market during the January-October 2013 period, in order to help drive down domestic rice prices.

November 2013

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