Situación actual

Whereas the previous sub-section explained the types of wheat and the impact of drought on wheat supply, this section discusses the activities of the international wheat trade between Australia and Indonesia as a complex network. This network includes the processes of ordering, purchasing, delivering and distributing wheat products both for domestic and international supply chain links. These factors may be influential reasons for maritime disruptions occurring. The international trade of wheat between Australia and Indonesia appears to follow two main processes in which maritime services play a significant role. The trading flow begins when Indonesian consignees order or deal the agreed quantity to be transported from Australia as shown in stage 2 of Figure 2-1, and then actions in the pre-shipment procedures are taken to prepare movements of wheat commodities for domestic and international transportation (Blankfeld & Fritz 2001). Similarly, in Australia, wheat owners who may also be exporters usually perform two

essential phases equally, the pre-shipment of cargoes, and the movement arrangement of cargoes for domestic and international destinations.

The supply chain structure for wheat commodities, as shown in Figure 2-1, can also be found in the domestic market of Australian grain products in the area of the South-Belt in Australia. In the early stage of a supply chain process, farmers continuously do business with their direct customers who are grain handlers. Subsequently, these grain handlers have their own downstream customers such as grain processors for either human food or animal food purposes. The important grain handlers in Australia are the Australian Wheat Board (AWB) Limited, Grain-Pool or Agra Corporation, Premium Grain-Handlers, Brooks Grain and ABB Grain Limited. The downstream customers are the vital groups which control the movement of wheat commodities either for the domestic or international market. The domestic market for grain on average reaches about six million tonnes annually or about 25 per cent of regular crop production (Chang 2003). This means that approximately 75 per cent of Australian‟s wheat products have been dedicated to the international market under the control of the AWB (ITS-Global 2006). The end customers of wheat derivative products in Australia are household and individual consumers through various primary and smaller channels by wholesalers and retailers.

There are three options for purchasing Australian wheat on both the domestic and the international market (Wilkinson & Henderson 2000). The first is direct purchase by processors from wheat farmers for which a cash price usually applies, with the potential for on-farm storage and deferred delivery. The second is by domestic buyers or merchants who will source packages of wheat for processors or handlers. Through this, forward contracts can be utilised and specific qualities can be specified including the logistics of storing, handling, and transporting the wheat that can be organized on behalf of the processor. The other alternative is to sell or buy the wheat through the AWB which provides similar services to other buyers or traders for specific quality traits.

Wholesale distribution of wheat is complex and changing less rapidly than in the retail sector as shown in Figure 2-1. This is also the case in the Australian-Indonesian route.

There are relatively few distributors with national reach in Indonesia. Direct importing has not taken off as rapidly as some analysts have predicted (Ariani 2003; Wijaya et al.

2005; Nadia 2006; Hemphill 2007). Some large users of imported products outsource both the import function and logistics. Although household and small to medium businesses tend to dominate the sector in numerical terms, there are also national processors. These are typically vertically integrated, owning primary production, processing and distribution facilities. Other users in Indonesia include a large number of small-scale food processors and national processors, both of which are focused on their target markets overseas and their local market.

Figure 2-6 shows that Bogasari Flour Mills (FM), Eastern Pearl FM, Sriboga Raturaya FM, and Panganmas Inti Persada FM are the major suppliers of Indonesia‟s wheat commodity imports from Australia (APTINDO 2007, 2009). These four major millers are becoming increasingly significant as wheat market controllers in Indonesia. Of the 5.4 to 5.5 million tonnes of flour consumed annually in Indonesia, 86 per cent is supplied by these four major millers and the other 14 per cent is imported from overseas (APTINDO 2000, 2004; Siagian 2007).

The distribution chain of Indonesian flour products to consumers is divided into direct and indirect channels (APTINDO 2003). Direct consumers are primary industry companies that represent about 32 per cent of Indonesian flour consumers. The biggest consumers of flour based products in Indonesia are small and medium enterprises (SME) which purchase about 63 per cent (APTINDO 2004). The traditional Indonesian flour consumer is the house-hold which purchases about five per cent annually. As reported by International Strategic Team (INSTATE) and United States Department of Agriculture (USDA), the distribution channel for these indirect consumers commonly involves regional and local distributors, depots in each local districts, wholesalers, and retailers (INSTATE 1995; USDA 2001).

In terms of the end product of flour-based commodities in Indonesia, they are mostly classified into three major end products such wet noodles (30 per cent), bread (25 per cent) and instant noodles (20 per cent) (APTINDO 2003, 2004). Wheat handlers in both

countries are important entities when considering who are affected when maritime disruptive events occur in the wheat supply chain.

Figure 2-6. The mapping of main buyers and processors in Indonesia

Source : APTINDO (2007) and Bogasari (2007)