In Indonesia and the Philippines, the trade is mainly based on cereals import. The most imported product of both countries is also wheat grain. In those countries where there is no wheat production, demand for flour-based products is rapidly growing and this increases the import amount. Considering the amount of imports, it is possible to say that in the last 10 -year period demands increased by 60 percent in Indonesia, by around 100 percent in the Philippines. This demand milling enables the growth and development of the milling industry.
Located between Southeast Asia and Australia and consisting of a number of islands, Indonesia is adjacent to Malaysia in east, Papua New Guinea in North. Indian Ocean extends on its south and west. Indonesia, which has about 13 thousand islands, has fairly large forests and mountains, and a volcanic land. According to World Factbook prepared by the CIA, Indonesia which has an estimated population of 256 million is also the world's 4th most populous country. The country, rich in mineral resources, is one of three countries having the world's largest coal reserves.
Overseas neighbors the Philippines consisting of about 7100 islands are Taiwan and China in the north, Vietnam in the west. Approximately 100 million people live in the country with a tropical climate. Population is concentrated in the center of the capital of Manila and neighboring regions in Luzon; population is scattered sparsely in Mindanao, Negros and other southern islands. 44.4 % of the population lives in urban areas. The majority of workers go to work abroad either permanently or temporarily.
GENERAL ECONOMIC OUTLOOK
Gaining independence in 1945, Indonesia set economic targets after the big economic problems of the 1950s and 1960s with 5-year development plans. Stable manner of the country’s economic management allows it to be in a steady growth. This growth has occurred in the rate of 6 % per annum over the period of 1970-96. Being one of the poorest countries In the 1960s, Indonesia became in 1996 with an income of $ 1,150 per person. Listed among East’s leading countries of the Far East with its Rich natural resources, 240 million-population and the growth performance it showed in the last 25 years we have left behind, Indonesia has gathered the attention of the financial environment with the crisis in mid-1997. The influence of the crisis in Asian countries had been quite effective. Average annual growth between 1997 and 2001 after the crises was -% 0.17. Today, the balance of the Indonesian economy is regarded as quite good and is emerging thanks to these sectors playing an important role. Agriculture including abattoirs, fisheries and forestry maintains its traditional position as the leading occupation in terms of employment and production.
The Philippines is among the emerging economies of South -East Asia. While implementing market economy as economic policy, regulatory mechanisms for consumer protection are used in several sectors. According to IMF data, it is estimated with that by 2014 GDP is 284.6 billion US$, while per capita income is at 2,862 US dollars. Experienced growth rate of GDP is 6.1% for 2014.
By 2014, the service sector in Philippines constitutes 57.3 %, the industrial sector constitutes 31.4 % and the agricultural sector constitutes 11.3% of Real Gross Domestic Product. Growing sector in recent years has been the services sector, especially the financial sector. The share of the agricultural sector is variable because it depends on weather conditions. Depending on the private consumption, the growth rate of the country’s GDP in the period of 2016-19 is expected to be 6% per annum on average.
ROLE AND IMPORTANCE OF AGRICULTURE
According to the CIA World Factbook, agriculture meets 13.7 percent of Indonesian economy. Wide and fertile soil has led Indonesia to be one of the leading countries in the production of various agricultural products. Although the share of agriculture in the economy has decreased the last few years it continues to be a source of livelihood of many Indonesians. That about 45 percent of the working population is employed in agriculture in Indonesia is the biggest indicator.
Agricultural enterprises in the country can be divided into three in general terms. These are the first small-scale agricultural land owned by families. Mainly rice cultivation is done and traditional farming methods are used largely in the land. Second one is small-scale businesses producing export-oriented products, and the third one is foreign-owned and private large-scale farmlands. These Large-scale farmlands are also generally cultivating products for export.
The rapid growth of the country's population has led to the government’s orientation towards self-sufficiency policy. For this purpose, the rate of arable land has been tried to increase and agriculture technics have been modernized by using the fertilizer and improved seeds. The development of irrigation systems as well as training for farmers is one of the studies conducted for this purpose. Production of rice regarded as basic food is increasing and approaching levels to meet domestic demand.
Agricultural meets 13.7 percent of the economy in Philippines. About 30 percent of the population in Philippines lives in rural areas and about 70 percent of the country's workforce is employed in agriculture. Although agriculture is an important source of employment in the country compared to the manufacturing industry the share of GDP has declined in recent years. Although agricultural exports constituted all of the country’s exports in the past it constitutes only 3% of external revenue in recent years.
The basic agricultural products in the Philippines are rice, corn, coconut, sugarcane, bananas, pineapples, coffee, cassava and tobacco. Rice has an important place among the primary food sources of the population. Rice production has increased steadily since the 1950s; also product improvement has been provided with fertilizers.
GRAIN PRODUCTION AND CONSUMPTION OF INDONESIA
Like many Asian countries, rice stands out among the cereal products produced in Indonesia. With rice production exceeding 30 million tons, the country is among the top three in global production ranking. According to the USDA, the country's rice production has remained between 34 and 38 million tons. In the last 10 in the season, the lowest production level of 34.8 million tons in the 2004/05 season, the highest production was realized at 38.3 million tons in 2008/09 season. According to the USDA, Indonesia’s rice production which was, 36.3 million tons in 2013/14 season, declined to 35.7 million tons in 2014/15 season. The expectation facing the 2015/16 season is that production will rise to a new level of 36.3. Although the country takes part as the first three countries in the world rice production, the production that it realized cannot meet the consumption in the domestic market all the time. Especially while production remained 35-36 million tons in the last 6 season the consumption was over 38 million tons. According to the USDA, Indonesia's rice consumption which is 35.8 million tons in 2004/05 season has increased 36.3 million tons in 2007/08, 37.1 million tons in 2008/09 and 38 million tons in the following seasons. The consumption which was38.5 million tons in2013/14 and 2014/15 seasons is estimated to rise to38.6 million tons in 2015/16 season.
The other featured product in Indonesia’s grain production is corn. The country is among the first 15 countries in the world corn production. But the country's production depends on weather conditions and it is not possible to talk of a steady increase. Overall, the production has remained between 6 and 10 million tons. According to USDA data, for the last 10 seasons, the lowest production was 6.8 million tons, and the highest production was 9.1 million tons. In the 2015/16 production season, it is estimated to reach 9.6 million tons. If estimates are realized, production will have reached the highest amount in the last 10 seasons. According to USDA data, the country's corn consumption which is at 7.8 million tons in the 2004/05 season reached 8.5 million tons in the2007/08 season, 10.5 million tons in the 2011/12 season, 11.9 million tons in the 2013/14 season with a steady increase. Corn consumption which increased to 12.2 million tons in the 2014/15 season is expected to increase in the 2015/16 season and to reach 12.7 million tons.
Wheat production is not realized in Indonesia, but its consumption is increasing every day. According to USDA data, wheat consumption of Indonesia which is 4.4 million tons in 2004/05 season reached to 5 million tons in 2006/07, 6 million tons in 2010/11, and 7.1 million tons in the 2013/14 season. Wheat consumption in the country which continued to increase in the 2014/15 season and reached 7.3 million tons is expected to reach the 7.6 million levels in 2015/16 season. With this consumption, the country is among the world's 15 largest wheat consumers.
GRAIN PRODUCTION AND CONSUMPTION OF PHILIPPINES
As in Indonesia, the most important grain that the Philippines produce is rice. Philippines produces 9 to 12 million tons of Rice per year, in contrast to Indonesia, shows a more stable and increasing graph. According to the USDA, Philippines' rice production, 9.4 million tons in the2004/05 season, rose to10.4 million tons in 2007/08, 11.4 million tons in the 2012/13 season. While rice production in the2014/15 season is at 11.9 million tons it is expected to decline and be at 11.5 million tons in 2015/16 season.
Being among the top 10 countries in the world rice production with this production volume, Philippines cannot meet its domestic consumption fully though it has much higher production than in many countries; consumption rate remains 1-2 million more than production. According to the USDA, rice consumption in the country which was at 10.4 million tons In the 2004/05 season increased to 13.4 million tons in 2007/08; but declined again to 12 million tons by 2010/11. Increasing once again13.2 million tons In the 2014/15 season, the consumption is expected to remain at this level again in 2015/16 season.
In the Philippines, corn is followed by rice in grain production. Philippines which carry out corn production between 4 and 8 million tons per year, exhibits an increasing, consistent way in corn production as in rice in the last 10 seasons. According to USDA data, the country's maize production which was about 5 million tons in the 2004/05 season reached 6.2 million tons in 2006/07, 7.2 million tons in 2010/11, and 7.6 million tons in the 2014/15 and is expected to reach 7.8 million tons in 2015/16 season. Consumption shows a higher graphic than production in recent years. Corn consumption which was at 5.1 million tons in 2004/05 season reached up to 8 million tons in2013/14 season when production is7.5 million tons. Maize consumption which was at 8.5 million tons in2014/15 season is estimated to remain at 8.6 million tons in the 2015/16 season.
Wheat, as in Indonesia, is not produced in Philippines too. Consumption amount continues to increase every year. Wheat consumption in the Philippines which was 2.6 million tons in the 2004/05 season reached 3.1 million tons in the 2008/09 season. The consumption of 4.5 million tons In the 2014/15 season is expected to continue to rise in the 2015/16 and reach 4.9 million tons.
GRAIN TRADE IN INDONESIA
In Indonesia, cereals trade is unilateral in general; namely it is based on imports. The country's most imported grain is wheat. In the country where there is no wheat production, demand for flour -based products is rapidly increasing which increases imports. In 10 years, demand and consequently imports increased by around 60 percent. According to USDA data, while the amount of imports carried out on the basis of wheat in the country was at 4.7 million tons in the 2004/05 season it reached to 7.4 million tons in 2014/15 season. Ranking in second place in world wheat imports with this amount, Indonesia is expected to import about 7.8 million tons of wheat in the 2015/16 season.
Corn follows wheat in imports. Maize import amount of the country which was less than 1.5 million tons in 2010/11 has increased to 3 million tons in 2010/11. Falling by 1.7 million tons in the next season, import amount has increased to2.7 million tons in the 2012/13 season, 3.5 million tons in the 2013/14 season. Remaining at 3.2 million tons in the 2014/15 season, corn imports are expected to be in 3 million tons in the 2015/16 season.
Rice imports remained below 2 million tons in the last 10 seasons except for two seasons. The country has made the lowest rice imports in the 2008/09 with 250 thousand tons, highest import in the 2010/11 season with 3 million tons.
GRAIN TRADE IN PHILIPPINES
Wheat ranks first in the imports of the Philippines. Demand for wheat -based products is increasing every day in Philippines, as well as in Indonesia. Thus, the country which does not produce wheat is obliged to meet the domestic demand through imports. According to USDA data, the country's wheat import has increased nearly 100 percent in the last 10 seasons. Wheat import of Philippines which was at 2.5 million tons in 2004/05 season has increased to 5 million tons in 2014/15 season. The country is estimated to import 4.8 million tons of grain in the 2015/16 season.
In Philippines where corn imports ranged from 50 to 750 thousand tons, rice is also a prominent grain in imports. Importing an amount varying between 1 and 3 million tons of rice every year, the country is among the first 10 countries in world rice imports.
FLOUR MILLING INDONESIA AND THE PHILIPPINES
As it is mentioned above, In Indonesia, the consumption of wheat-based products is increasing and this enables milling industry to develop and wheat based products to be imported more. According to the Grain and Feed Report dated 2015 and published by US Department of Agriculture Foreign Agricultural Service (USDA), the number of flour mills in the country in 1998 is four. Today, there are 29 flour mills with a total capacity of 10.3 million tons per annum. It is believed that these mills running with a capacity of 75 percent in 2012 use 60-70 percent of the capacity today. The increasing competition in the market and the strong supply is believed to be the reason for this development. According to information included in the report, it shows that growing demand for bakery products also affects Indonesia's imports of wheat flour. If jeans imposed for imports of wheat flour in the country ended on December 4, 2014. However, the depreciation of the rupee has also made imports from Sri Lanka, India and Turkey difficult. Therefore, the domestic production is reported to dominate 96.4 percent of the market. Respectively, Turkey (43 percent), India (23 percent) and Sri Lanka (16 percent) dominate the imported flour market. It is indicated that Indonesia imported 225.392 tons of flour in 2013/14 season. These figures indicate a decline of about 31 thousand tons compared to the previous season.
66 percent of flour production in Indonesia is used by small and medium-sized operators producing wheat-based products. Small-scale producers of noodles, many street vendors, bakers and traditional Indonesian pastry sellers are included to this group. Instant noodle manufacturers, medium-sized and large bakeries, biscuit producers share the remaining 34 percent. In the report which shows that per capita flour consumption in the country reached 19 kg, middle and upper economical classes are also expressed to turn towards western style pasta and bread consumption. Still, noodle production dominates 70 percent of Indonesia's wheat flour consumption. This figure is 20 percent for the bakery industry, although it is 10 percent of domestic consumption and biscuits.
According to Grain and Feed Report published by US Department of Agriculture, Foreign Agricultural Service (USDA), Philippines flour milling industry has been realizing a significant growth in the last 20 years. There are 15 flour mills in the country, the total capacity of these mills exceed 4.1 million tons. In addition, there are two more mills of which construction is ongoing. It is stated in the report that several mills seek to renew its installed capacity.
Developments suggest that demand for wheat flour in the Philippines is on long-term rise. With the opening of the new mill, it is believed that the wheat consumption which increased in 2014/15 season will rise steadily. As production in the country increase, flour imports decrease. With the rate of 93 percent in 2014, Turkey has become dominant in flour import of Philippines. Australia, China, South Korea, Japan, The United States and Thailand follow Turkey in terms of imports.