Instant Noodle Price Issue Triples: It's Possible If Wheat Imports Only Rely On Ukraine

JAKARTA - "Be careful who eats a lot of noodles from wheat, tomorrow the price will be 3 times that, I'm sorry, I'm just talking about this extreme."

The statement from the Minister of Agriculture Syahrul Yasin Limpo in the Webinar on the Strategy for Implementing GAP for Food Crops Stimulating Production to Anticipate the Global Food Crisis on Monday (8/8) shocked the public.

This means that the price of instant noodles of around Rp. 2,500-Rp. 3,000 can increase three times to Rp. 10 thousand.

However, not without reason, Syahrul Yasin Limpo explained that by looking at the indications of the war between Ukraine and Russia, which incidentally both countries are the largest suppliers of wheat in the world.

Currently, said Yasin Limpo, there are still 180 million tons of wheat that cannot leave the two countries. So, even though the availability is there, the price will certainly increase drastically.

“There is wheat, but the price will be very expensive. Meanwhile, we continue to import. If I clearly don't agree, whatever we eat, we just eat cassava, sorghum, sago," said Syahrul Yasin Limpo from the YouTube channel of the Directorate General of Food Crops, Ministry of Agriculture, Tuesday (9/8).

Franky Welirang, Director of PT Indofood Sukses Makmur Tbk considers the statement that the three-fold increase in the price of instant noodles is too much. The increase is likely to occur if the price of wheat entered in August to September 2022 is already at the highest level, but it will not be up to 3 times.

This is because the wheat flour in the components in the manufacture of instant noodles is not 100 percent derived from wheat raw materials.

"The price of instant noodles could go up, it could. But if there is a statement that says it can be 3 times, it's excessive. It's very, very excessive," Franky said as quoted from CNBC Indonesia, Thursday (11/8).

Moreover, Franky continued, Indonesia imports wheat from many countries. A number of countries that had failed to harvest have also gradually improved. Thus, the domestic supply of wheat will not be much affected.

"I don't think the people need to be afraid (about the price of instant noodles). The price of wheat is already the highest today. It's okay, it won't go up again, I don't see international wheat prices will be higher than today," he said. .

The Minister of Trade, Zulkifli Hasan, did not agree with the three-fold increase in the price of instant noodles. Instead, he said, wheat prices are likely to decline because wheat-producing countries such as Australia, Canada and America, which had failed to harvest, are now returning to harvest.

"No [increase], in the past the harvests failed like Australia, Canada, America, now the harvests are successful. Especially now that Ukraine is allowed to sell," said Zulhas, quoted from Bisnis.com.

In line with the Member of Commission II DPR RI Fadli Zon. He also assessed that Indonesia is not dependent on grain supplies from Ukraine. The majority of Indonesia's wheat needs are imported from Australia.

"In my observation, the supply of wheat from Ukraine has little effect on us because there is no dependence. As said, imports come from Australia and other countries," wrote Fadli Zon on his Twitter account, Thursday (11/8).

Referring to data from the Central Statistics Agency, the volume of Indonesian wheat imports from January to May 2022 mostly came from Australia, which reached 1.57 million tons with a value of US$585.6 million. Katadata said that the volume of Indonesian wheat imports from the Kangaroo Country reached 35 percent of the total imports.

The country of origin for Indonesia's next largest wheat import is Argentina, which is 1.41 million tons worth US$497 million. Then, Canada with a volume of 572.6 thousand tons worth US $ 276.14 million.

There are also imports of Indonesian wheat from Brazil weighing 594.26 thousand tons worth US$211.24 million, from India reaching 115.86 million tons worth US$40.47 million, and imports of wheat from other countries amounting to 98.15 thousand tons with value of US$36.9 million.

Since the period 2012-2017, Australia has controlled 50-60 percent of wheat imports in Indonesia. In 2018, citing the Indonesian Central Bureau of Statistics (BPS), the top four wheat importing countries in Indonesia were Ukraine 2,419,768 million tons, Australia 2,419,709, Canada 1973,706, and the United States 904,174. However, more Ukrainian grain for animal feed replaces imports of corn which are banned to protect domestic maize.

In 2021, BPS data shows that Indonesia's wheat flour imports will reach 31.34 thousand tons with a total value of US$11.81 million. The largest imports came from India reaching 19.9 thousand tons with a value of US $ 6.76 million. This means that 63.49 percent of Indonesia's wheat flour needs come from India.

Indonesia's next largest import of wheat flour comes from Vietnam, weighing 4.67 thousand tons (14.9%) with a value of US$ 1.97 million. Then, South Korea with a weight of 3.95 thousand tons (12.59%) worth US $ 1.63 million.

The Russian-Ukrainian war did have a domino effect on rising wheat prices. However, specifically the impact is not too big for Indonesia.

Currently, said Head of the Trade Policy Agency of the Ministry of Trade Kasan as reported by CNBC Indonesia, Indonesia's wheat supply is still quite safe. Many business actors have diverted their wheat imports from other wheat-producing countries, not limited to Ukraine.

“Moreover, the current and next year's food price index has started to show a downward trend in prices. The peak price has been passed by almost all commodities," he concluded.