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USW Bringing Indonesian Milling Executives to Experience U.S. Wheat Supply System
August 12, 2016
ARLINGTON, Virginia — Three top-level executives from Indonesia’s largest flour milling company will travel to North Dakota and the Pacific Northwest August 17 to 27, 2016, with U.S. Wheat Associates to learn how they can select and efficiently import different classes of U.S. wheat. The millers work for Bogasari, which operates four separate flour mills in Indonesia. These managers in quality and product development, production planning and finance will see and hear how U.S. hard red spring (HRS), hard red winter (HRW) and soft white (SW) can help them meet the needs of their growing market.

Funding for this trade team visit comes from USDA through its Foreign Agricultural Service export market development programs and from in-kind contributions from the Montana Wheat and Barley Committee, the Idaho Grain Commission, the Washington Grain Commission, the Oregon Grain Commission and the Wheat Marketing Center in Portland, OR.

“USW has had success demonstrating to Indonesian mills the processing advantages of flour made from U.S. hard red spring and winter wheat for bread products,” said USW Regional Vice President Matt Weimar, who will lead the Bogasari team. “We are also promoting soft white for superior performance in cakes, cookies and other soft wheat products. This visit supports those strategies very well.”

The team will start its visit in Fargo, ND, with the North Dakota Wheat Commission, North Dakota State University and Northern Crops Institute focusing on the advantages of HRS and the on-going work to improve functional performance. Next is a visit to Greg Svenningsen’s farm in Valley City, ND, and a country elevator owned by Columbia Grain before the team flies west to Portland. The visit there and then back up-country to eastern Washington and northern Idaho provides a complete picture of the U.S. Pacific Northwest wheat supply system and a detailed look at SW advantages.

“With U.S. wheat at a price disadvantage compared to Canadian wheat the last couple years and with Australia’s strong influence with Indonesia nearby, it is important to bring top-level managers from a large mill like Bogasari that has a majority market share to the United States to put a face on our advantages,” said Weimar. “It makes a difference when the buyer meets the breeders, farmers and grain handlers who actually make U.S. wheat the world’s most reliable supply.”

USW is the industry’s market development organization working in more than 100 countries. Its mission is to “develop, maintain, and expand international markets to enhance the profitability of U.S. wheat producers and their customers.” USW maintains 17 offices strategically located around the world to help wheat buyers, millers, bakers, wheat food processors and government officials understand the quality, value and reliability of all six classes of U.S. wheat. Its activities are made possible through producer checkoff dollars contributed by 18 state wheat commissions and cost-share funding from USDA’s Foreign Agricultural Service.

2016 Indonesian Milling Executive Team – Members

Mrs. Herni Sutanto
Vice President, Quality & Product Development

Ms. Januwarti Gondo Soebedjo
Vice President, Finance

Mrs. Adrina Dewani
Manager, Production Planning & Inventory Control

Mr. Matt Weimar
Regional Vice President for South Asia, U.S. Wheat Associates

2016 Indonesian Milling Executive Team – Trip Highlights

In North Dakota
· Observe production, storage, transportation and marketing of HRS (dark northern spring) wheat including farm and country elevator tours
· Learn more about U.S. and global HRS and durum supply and demand situation
· Observe and discuss HRS and durum breeding programs and developments in quality
· Learn about educational programs and short courses at the Northern Crops Institute

In Portland, Oregon
· Learn more about U.S. and Pacific Northwest wheat supply system, market situation
· Overview of Federal Grain Inspection Service’s independent certification program
· Observe export elevator quality control and loading processes

In Washington State and Idaho
· Observe and discuss SW breeding programs and developments in quality
· Observe how wheat is transported from the farm to train and barge loading facilities
· Meet with Washington and Idaho wheat commission farmer leaders and grain handlers

USW Defends Wheat Sales in Competitive Indonesian Market

With a unique opportunity for growth in the South Asian nation of Indonesia, USW has focused activities on new flour mills opening to meet increased demand for wheat foods as well as existing mills that still dominate the market. This effort paid off as the mills and their customers recognized they could get good value and differential quality from U.S. HRS, HRW and SW. Indonesia increased HRS imports from about 100,000 metric tons (MT) in marketing year 2008/09 (June to May) to more than 500,000 MT in 2013/14. Imports of SW nearly doubled over the same time to more than 480,000 MT. Bogasari, which once only milled wheat from Australia, is now one of Indonesia’s largest HRW importers, taking whole Panamax size cargoes of 70,000 MT. As Bogasari controls between 55 percent to 60 percent of the expanding Indonesian market, that is an important breakthrough.

Yet the industry’s growth had a downside as a highly competitive environment sparked a price war between flour mills. Some mills turned to least cost-wheat supplies in order to protect sales, while others felt they must sacrifice quality and profits to gain market share or simply to keep their doors open and eventually cover their sunk costs in new operations.

To defend its reputation, and maintain a base market share in a market with good potential, USW continues to promote U.S. wheat to established milling companies like Bogasari. It also did research to identify other customers with the best opportunity to continue supporting U.S. wheat in integrated milling and baking operations.

Using 2015/16 MAP funds, USW South Asian Bakery Consultant Roy Chung and Regional Technical Specialist Peter Lloyd met with purchasing and quality assurance managers of all Indonesian mills in September 2015. They provided in-house training on procurement, processing and quality control measures that positioned U.S. wheat as ideal for wheat foods that have the highest profit margins. To reinforce the technical support visit, USW South Asian Regional Vice President Matt Weimar met with several senior mill management staff during industry meetings on four visits from May to November 2015, reinforcing work of USW's technical services personnel while discussing the wording of contract specifications and the use of Federal Grain Inspection Service shipping log data and certifications to assure consistent U.S. wheat quality at the best value.

USW is uniquely prepared to provide such service that helps differentiate its successful quality-based marketing approach. For the mills with integrated divisions, Chung’s work demonstrated how SW could improve their efficiency, product quality and bottom line return. One key was introducing solvent retention capacity (SRC) analysis to evaluate the performance of different flour types for an individual end product. This analysis typically reveals the advantages of U.S. soft wheat such as SW, and has benefits for the miller and processor. Chung's introduction of frozen dough, meant for multi-store bakery chain operations, is developing demand for consistently high strength HRS.

This proactive approach by the USW Singapore team resulted in some new mills purchasing SW for the first time soon after USW’s activities there. The companies state their intent to purchase additional U.S. wheat in the future. Moreover, the integrated activities demonstrate that targeting new flour mills and providing valuable service to existing established mills remains effective and builds the potential for increased sales when the Indonesian economy and market stabilizes and global market conditions change in favor of U.S. wheat growers.

In 2015/16, total U.S. wheat exports of HRS, SW and HRW to Indonesia totaled about 22.3 million bushels (608,000 metric tons), which boosted income for wheat farmers and the U.S. wheat supply chain primarily in North Dakota, Montana, Idaho, Washington and Oregon.

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