Rift over flour to Indonesia

THE State’s farmers stand to lose a “significant” portion of the $500 million wheat trade with Indonesia if the Federal Government continues its support of lower-cost Australian flour exports into Indonesia, according to a local consultant to Indonesia’s flour industry.

Roger Simpson told WA Business News while Indonesia’s biggest flour mill (Bogasari Flour Mills) “doesn’t really want to come away from the AWB”, it feels compelled to in order to compete with cheaper flour imports.

“They are not going to cut off their nose to spite their face,” Mr Simpson said.

Mr Simpson confirmed that, while Bogasari was in discussions with other Northern Hemisphere (India and Europe) wheat exporters, the company would not be able to order until the Northern Hemisphere harvest in May.

He said Bogasari’s commitments to Australian wheat expired in the middle of the year.

Bogasari is the largest private buyer of Australian wheat – most of which comes from WA.

Bogasari is reported to have purchased 1.3 million tonnes of wheat from the AWB last year.

In last week’s Farm Weekly newspaper the head of Bogasari threatened to slash his Australian wheat orders if his concerns about New South Wales flour miller, Manildra Flour Mills, were not addressed immediately.

Bogasari’s Piet Yap alleged that Manildra was dumping flour, hurting the local flour industry, and called on the Federal Government to act.

In 2000 Manildra successfully challenged an imposition of a dumping duty, however the Indonesian Government later installed a temporary 5 per cent tariff on all flour imports.

Later, one of Manildra’s flour brands failed to meet Indonesian food standards, but the Indonesian Government eventually issued Standards National Indonesia (SNI) certificates to Manildra.

Mr Simpson claims the Federal Government has unfairly backed Australian flour exporters, such as Manildra, by lobbying the Indonesian Government.

He said Bogasari felt it had been “very shabbily treated” by the Federal Government.

But while the wheat exports are under threat, Mr Simpson said the trading relationship was not beyond repair.

He said Bogasari needed high-level assurances from the Federal Government that it would “not intervene in the same manner it has in the past”.

“This is a fundamental issue of intervention,” Mr Simpson said.

“Bogasari accepts there will be [flour] imports. Provided it is priced fairly and meets Indonesian standards.”

A spokesman for Federal Trade Minister Mark Vaile was not prepared to respond to Mr Simpson’s statements.

However he did say that Mr Vaile had just written to Mr Yap to reinforce the importance of trading relationships between Australia and Bogasari.

The spokesman reiterated the Government’s rejection of dumping and insisted there was nothing wrong with Australian flour exports.

Concerned about the issue, the WA Farmers Federation last week took a consortium of growers to Indonesia to reassure Bogasari that it was one of their most important markets.

In a statement released late last week WAFF also called on the Federal Government to reassure the Indonesian flour millers of the value of the wheat trading relationship with Indonesia.

Mr Simpson was in Perth earlier this week to discuss the issue with the State Government and WAFF.