In the past five years, the country’s instant noodle production has increased fast with growing demand. Many Indonesian sometimes take instant noodles for meal instead of rice. Instant noodles are cheaper than many other  food products. 

In 2004, the country’s instant noodle production  reached 974,000 tons or around  12.9 billion packets. The production rose in the following year to 1 million  tons  (13.5 billion  packets)  and to 1.3 million  tons  (18 billion  packets)  in  2006. 

The country’s production of instant noodles in 2007 grew around 6.7%   to 1.4 million tons with sales at 19.2 billion packets. In 2008, the production grew further to 1.5 million tons. 

A decline in the production of instant noodles for the lower market segment was caused by rising prices of basic material, wheat flour.  Selling price hikes caused a decline in the sales of the product in lower segment of the market forcing some producers to stop producing instant noodles.    

In 2009, the production is expected to increase with improved economic condition. The  production is forcast to reach 1,880,892 tons in 2009.   

PT. Indofood plans to issue bonds valued at Rp1 trillion this year. Part of the bond fund will be used to increase  its production.    

Supply of wheat flour 

Wheat flour is the main basic material for instant noodles. Other basic materials include vegetable oils, salt, natrium polyphosphate, natrium carbonate, etc. The packaging is made from OPP (oriented polypropylene) film. Most of the basic materials are available locally. 

In 2006, the country’s   production of wheat flour  totaled 3.68 million  tons ,  and 20%  or 736,000 tons of which were used  to feed instant noodle industry.  In  2007 wheat flour  consumption   for the industry totaled 786,000   tons. In   2008, the  consumption  fell to 731,000   tons.

Wheat flour  is available in abundance  in the country produced mainly by PT ISM Bogasari Flour Mill of the  Indofood Group. Since 1998, there has been no regulation  on  wheat flour trade. The price of that commodity has been allowed to be dictated by the market scrapping the  monopoly of  the Salim Group through the Indofood Group. Other companies have been allowed to produce or import wheat flour . 

With the cut in the import duty on wheat flour  to  0%,  imported products, which are sometimes cheaper in price,  take part in the market competition. However, among four producers competing in the market, three are affiliated to the Salim Group. The three are PT ISM Bogasari, PT Berdikari Sari Utama Flour Mill, which was established in 1982 in Makassar and  PT Sriboga Raturaya, which was established  in 1998 in  Semarang. The other one is PT. Pangan Inti Persa-da in Cilacap.  

There are three types of wheat flour produced in Indonesia -- wheat flour  with protein content of 10.5% - 12%, wheat flour   with  protein content of  9% - 10.5% and  onw with protein content of 7% - 9%. The one with protein content of 10.5% - 12%, is generally used  as feedstock for bread  and snack food. The one with protein content of 9%-10.5% is used for instant noodles, and the with protein content of 7% - 9%, is used for cake products. 

Indofood Group through Bogasari produces different types of wheat flour with different protein contents for different market segments. Wheat flour  produced by Bogasari  is sold with more than 20 brands  such as Segitiga Biru,  Gunung Bromo and  Cakra Kembar/Kereta Kencana, which contribute  30% to wheat flour total sales by Indofood  each. 

The wheat flour  production capacity  of  Bogasari rose to 3.8 million  tons in 2008  from 3.1  million  tons  per year. Its wheat is imported entirely from Australia, Canada, India and  the United States. Most of the wheat flour  is used as feedstock for wet noodles, instant noodles and bread. A smaller part is used  to feed biscuit  and  snack  industries  and for households. 

Consumer industries including instant noodle industry account for around  35,% of the  total sales of  wheat flour by the Indofood Group, small  and medium industries for 64% and modern market outlets for 1%. 

Bogasari supplies all  wheat flour  needed by   Indofood  to produce instant noodles . In 2006, Bogasari  contributed around Rp9 trillion  or  33% to the total sales of  the Indofood Group. Bogasari’s sales have continued to rise  to reach 2.5 million  tons valued at Rp 11.6 trillion in 2007  and to 4.2 million  tons  or  around  Rp15.1 trillion in 2008. The increase was partly attributable to rise in the prices of wheat grains  in the world market.  Bogasari contributed around  38.9% to the total sales of Rp38.8 trillion  recorded by the Indofood Group  in 2008.    

Other basic materials such as vegetable oils,  salt, sodium carbonate, sodium phosphates, potassium carbonates, are partly  still imported . Vegetable oil , for exmaple, is supplied by large cooking oil producers including the  subsidiaries of the Salim Group PT Bimoli   and  PT Sayang Heulang.

Packaging material  for instan noodles, BOPP film, is also supplied locally especially by affiliate company PT Argha Karya Prima Sentosa (Arkaprin) which is a leading propducer of  plastic film in the country  and other affiliates like  PT Fatrapolyndo Nusa Industri.