Agricultural Sectors

Cotton

Cotton, wheat, and soybeans are the leading U.S. agriculture exports to Indonesia. Indonesia is the third largest importer of cotton from the United States. Local production meets only 0.5 percent of total demand from the textile and textile products industry. For marketing year (MY) 2010/11, Indonesian cotton imports are expected to decrease slightly to 2.2 million bales. Despite the higher prices of U.S. cotton, as compared to cotton from other suppliers, the United States continues to hold the largest market share in Indonesian cotton imports with a 53.5 percent share in MY 2008/09.

Soybeans

Indonesia is the world’s second-largest consumer of soybeans for direct human consumption. Per capita consumption of soybeans, primarily in the form of tofu and tempeh, is about ten kilograms annually. FAS Jakarta predicts that soybean consumption will continue to grow relative with the overall population growth. Indonesia imported nearly 1.5 million ton of soybean in MY 2009/2010. Tempe and tofu manufacturers continue to prefer U.S. soybeans over other suppliers, because of a preference for the texture and quality. Tempeh and Tofu account for 95 percent of Indonesian domestic soybean consumption. Historically, soybean requirements for Tempeh and Tofu grow by two percent and three percent respectively. The remaining five percent of soybean imports are used by other food industries such as soy milk, soy powder, soy sauce, and snack. The soybean consumption for products other than tofu and tempeh has grown by about 7.5 percent annually. Indonesia consumed 2.25 million tons of soybeans in MY 2009/2010.

Consumer Ready Food Products

The expansion of modern retail outlets in major urban areas throughout Indonesia, such as hypermarkets, supermarkets, and mini markets that have refrigeration and storage facilities provides good prospects for imported U.S. consumer-ready food products. The growth of franchise restaurants such as fast food, casual dining café’s, international and family style restaurants (specializing in Western and other non-Indonesian foods), food courts, as well as four and five-star hotels catering to the tourist industry also increased demand for imported food products. The introduction of new domestically produced food products, aggressive promotional activities, growth of modern retail outlets, customer sophistication, and growing health consciousness has driven the growth of the food-processing sector. This progress provides a potential market for U.S. food and agricultural ingredients, especially dairy products.

More consumers are expected to make purchasing decisions based on health and wellness concerns. Dairy and fresh fruit products are considered healthy. Dairy products used as an ingredient for baby foods and toddler milk formulas lead this category. Snacking is a part of the Indonesian culture. With exposure to western-style foods and increases in snacking, U.S. snack food exports to Indonesia are expected to continue increasing.

Wheat

Indonesian imports of wheat in MY 2009/10 are estimated to increase by seven percent to 5.56 MMT, compared to the previous MY 2008/09 of 5.2 MMT. Several new flour millers and multinational food manufacturers are coming into the market. In MY 2008/09, due to its geographical proximity to Indonesia, Australia held the largest market share of imported wheat to Indonesia (45 percent), followed with Canada (16 percent) and the United States (14 percent). The noodle industry makes up about 50 percent of overall Indonesian wheat flour consumption, followed by the bakery and biscuit industry (40%), fried meals (5%), and household use (5%).

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