August 1998 Edition
Reduction in Indonesia's Flour
Subsidy To Drive Down
Wheat Imports in 1998/99
Negotiations between Indonesia and the International Monetary Fund several months ago resulted in commitments to liberalize Indonesia's wheat and flour regime, hitherto controlled by the National Logistics Agency (BULOG). Recent announcements indicate that the subsidy (which reduces the price of flour by about 40 percent), will be phased out over three months beginning October 1. Given the resulting increase in consumer prices of wheat products, USDA projects that commercial wheat import demand will fall 1 million tons to 3 million tons. This estimate is in line with BULOG's recent tender activity of 700-750,000 tons per quarter. The 500,000 tons of announced donations by the US brings the import estimate for Indonesia in 1998/99 to 3.5 million tons.
Prior to this announcement by BULOG, there was considerable uncertainty concerning if and when the flour subsidy would be eliminated. Absent a fixed timetable for elimination, USDA had assumed continued flour subsidization throughout 1998/99, resulting in previous import estimates that showed no year-to-year downturn.
Foreign Countries' Policies and Programs
Situation and Outlook: Commentary and Current Data
Historical Data Tables:
General Footnotes for Grain Tables
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