Russian Invasion of Ukraine, may lead to price increase of processed food made from wheat in Indonesia

Wheat

Aditya Hartoto

Published Mar 3, 2022

The Russian invasion of Ukraine is expected to increase food prices that must be imported from the two countries. One of the foodstuffs imported from Ukraine is wheat. The Association of Indonesian Food and Beverage Entrepreneurs (Gapmmi) is still considering increasing the price of processed food made from wheat following the blockage of import supplies due to the Russo-Ukrainian war. Meanwhile, Gapmmi reports that the availability of wheat for the processed industry is relatively stable for March 2022.

Most of the domestically processed wheat products such as noodles, wheat flour, bread and cakes depend on imports. Indonesia imported 8.4 million MT of wheat seeds last year with a value of USD 2.6 billion. Of that amount, Ukraine, which is currently at war with Russia, has turned out to be one of the biggest suppliers of wheat to Indonesia.

According to the Central Statistics Agency (BPS) data, imports of wheat seeds without shells with Harmonized System (HS) code 10019912 from Ukraine throughout 2021 reached 2.07 million MT or worth USD 624.6 million. Based on this data, the import volume of wheat seeds from Ukraine will contribute about 23% of Indonesian wheat imports in 2021.

Wheat flour manufacturers in Indonesia would divert their import supplies to several countries if the increase in wheat prices from Ukraine were unstoppable. The current price of Ukrainian wheat, based on a report by the International Grains Council (ICG) as of 22 February 2022, is USD 295 per MT. The price fell slightly by 1.3% from 15 February 2022, which amounted to USD 299 per MT. However, global wheat prices continued to increase. At the same time, the price was recorded at USD 300 per MT, up 2.7% from the previous week at USD 292 per MT.