DEMANDS OF THE ASIAN MARKET
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INTERFLO
UR HO
LDINGS
LTD
DEMANDS OF THE ASIAN MARKET
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OVERVIEW Ø Macro economic & dietary trends.
Ø The flour milling industry in S/E Asia.
Ø The positioning of the Australian wheat
industry
Ø Potential innovations
Ø Closing comments on some challenges
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The “Asia Story” is well known…
Ø Economic growth across the region, urbanisation, rapid expansion of the middle classes, increased domestic consumption, increased household wealth & discretionary expenditures.
Ø Strong positive growth story and high expectations
of continuing improved outcomes.
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As the middle class develops, wheat flour consumption grows and market segments
multiple…
Broadening of diets, inclusion of wheat flour products as a standard part of a typical diet, within traditionally rice dominated diets. Wheat noodles have become a staple and ubiquitous food item, cakes & flour-based sweets are standard everyday items, and bread is the fastest growing segment
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Bogasari FM – Surabaya
Eastern Pearl FM – Makassar
Sriboga FM– Semarang
Panganmas FM – Cilacap
Bogasari FM – Jakarta
PETA LOKASI INDUSTRI TEPUNG TERIGU INDONESIA SEBELUM DEREGULASI (ERA BULOG)
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6
Bogasari FM – Surabaya
Eastern Pearl FM – Makassar
Sriboga FM– Semarang
Panganmas FM – Cilacap
Fugui Flour & Grain – Gresik
Bogasari FM – Jakarta
Pundi Kencana - Cilegon
Purnomo Sejati – Sidoarjo
Asia Raya – Sidoarjo
Pakindo Jaya – Sidoarjo
Berkat Indah Gemilang - Tangerang
Agri First – Medan
Cerestar - Cilegon
Lumbung Nasional - Bekasi
Halim Sarigandum-Medan
Golden Grand - Cilegon
Bumi Alam Segar - Bekasi
Horizon - Bekasi
Jakaranatama – Medan
Pioner Flour MiIls Sidoarjo Mustafa Mesindo -
Tangerang
Bungasari FM
Wilmar Group - Gresik
Crown Flour Mills - Tangerang
Note :
Pre-deregulation
Post-deregulation
Next – to be establish
PETA LOKASI INDUSTRI TEPUNG TERIGU INDONESIA - 2013
Sarana Prima Makmur - Banjarmasin
Total Kap. Giling: +/- 8.2 jt MT/Thn Terpusat di JAWA
Agrofood makmur Mandiri, Mojokerto
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MFM strategic locations
FFM Mill 1
SBFM Mill 2
FFM Mill 2
PFM
SBFM Mill 1
UMFM
MFM Mill 1
MFM Mill 2
KFM
Peninsular Malaysia – Location of all Flour Mills
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IFV
F
Uni
Uni
M
M
BD
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Milling capacity growth continues in EVERY market in S/E Asia…..
Ø Many businesses extrapolating the growth trend out 5-10 years
and building capacity ahead of the demand curve. Ø This consists of growth within existing players in
the flour industry, and new milling capacity from new players, typically with links to downstream processing and retail or to stockfeed milling. Ø Decentralised industry structure based around
manufacturing locations and transport economics.
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Traditional margins being squeezed, are causing changes in grist and sales
management….
Ø With much more milling capacity coming online, margins are being compressed in a battle for market share and throughput. Ø There appears to be a general movement towards higher ash, lower gluten products – optimising extraction and using less expensive wheat. Ø These cheap general purpose flours or 2-minute noodle flours have tight margins on sales but give bulk efficiency to a flour mill. Ø Therefore alternative origin cargoes (IMW, RUS, etc) enable cheaper grists in a competitive low pro GP and low pro noodle wheat market.
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As a general comment, Australian wheat has a well established competitive position in S/E Asia built up
over 70+ years….
Although not always the best match for product quality, Australian wheat is consistently available, with reliable quality parameters across a gluten range of 23-32%, enabling usage in a broad range of applications. Ø High extraction, low screenings, whiter noodle
colour, used in a range of products. Ø Most GP flours and noodle flours in SE Asia are
based on a combination of AH, APW and ASW. Ø Most 2-minute noodles are based on APW/ASW + a percentage of cheap filler wheat.
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For the bread segment, the boot is on the other foot, and has been for a long
time…. Bread flours are a
different story, which is a big area of opportunity for Australian producers. Apart from APH which is not typically price competitive with DNS/CWRS.
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Other origin wheats are becoming more important and less “opportunistic" in the
buying program….... Ø Other origin wheats are utilised to then push the
base quality over the required standard or product parameter. (i.e., lifting gluten in noodle flours) Ø Cost competitiveness of alternative origins,
especially on the low protein and lower quality products
Ø Sometimes referred to as “Filler Wheat” due to on/
off availability and perceived inconsistency of quality parameters, phytosanitary issues and darker noodle colours.
Ø However are typically $10/mt+ cheaper than lowest
on a CNF basis through lower costs of production and supply chain improvements.
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Taking everything into account, there are opportunities for wheat quality innovation…..
Ø Innovation with wheat variety end-product performance.
Ø High yielding Australian varietal ASW or even feed
wheat that can satisfy cheap bulk flour for 2-minute noodles. Ø An AH wheat that gives better water absorbtion and
extensibility and prices PNW wheats out of the grist
Ø Australian Club wheat (soft) that can be blended or substitute for SWW, with good solvent retention.
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This is a very interesting time for the Australian wheat industry on a number of
fronts…
Ø Ability to satisfy increasing demand within SE Asia and other regions with larger Australian production?
Ø Millers will increasingly have to turn to alternative origins, strengthening buying patterns and channels and becoming more familiar with new origins.
Ø Even more than in the past, the importance of front-end
shipments (December-April) immediately following harvest. i.e. prior to the Black Sea new crop increases.
Ø Cost competiveness and supply chain flexibility is decreasing. Eg) Rabo study; port allocation systems
Ø And the industry structure is yet to evolve to allow price signals up and down the supply chain. The BHCs’ have significant market power….
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FLOUR FORTIFICATION INITIATIVE
A Public-Private-Civic-Investment in Each Nation
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The Problem Ø Two billion people – over 30% of the world’s
population – are anemic, many due to iron deficiency.
Ø An estimated 300,000 neural tube birth defects occur every year globally. Most of these could be prevented.
Ø Vitamin and mineral deficiency contributes to more than one-third of all deaths in children under age 5.
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A Proven Solution
Ø Fortifying grains with iron improves iron status, which in turn helps children develop physically and mentally. Iron is also critical for productivity and the health of a pregnant mother and her unborn child.
Ø Every year, an estimated 38,417 serious birth defects such as spina bifida are prevented globally where flour is fortified with folic acid. That’s an average of 105 healthier babies a day.
Ø Comparing the cost of fortification with the cost of treating children with spina bifida, countries report a cost:benefit ratio of at least 1:12.
Ø In three consecutive sessions, the Copenhagen Consensus panel of leading economists ranked providing vitamins and minerals among their top three most cost-effective investments.
Grain Fortification Legislation 79 countries require fortification of wheat flour, maize flour, and/or rice
November 2013. Source: Flour Fortification Initiative. http://www.ffinetwork.org/global_progress/index.php To request data, e-mail [email protected]
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