Inflation and instant noodles | Borneo Online Newsletter

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CNA – On a busy, narrow street in South Jakarta, the low-key warkop along Jalan Amil draws a steady stream of shoppers.

Short for “warong kopi” or cafe in Bahasa Indonesia, this small eatery is one of many in the Indonesian capital selling three-in-one coffee and simple dishes like instant noodles and fried tempeh.

Agus Mulyadi, now 42, moved to Jakarta from Tasikmalaya Regency in West Java more than two decades ago in search of a better life. He’s had his warkop for the past eight years.

Instant noodles are popular in Indonesia, eaten not only at home, but also at warkop. The noodles come in a variety of flavors to suit all taste buds. As a meal, it’s cheap, convenient and tasty.

But even so, business at Agus’ establishment has not been good. At the height of the COVID-19 pandemic, people were afraid to eat out. Agus tried to cope but it wasn’t easy.

Bowls of instant noodles with eggs and vegetables are being prepared at a ‘warkop’, or cafe, in South Jakarta. PHOTOS: ANC
Agus Mulyadi serves instant noodles at his South Jakarta warkop

‘A FRIEND AT THE END OF THE MONTH’
Meanwhile in Bangkok, also during a COVID-19 lockdown, Ungkool Wongkolthoot took an interest in instant noodles and the number of varieties on the market.

After discovering and sourcing nearly 350 different types, he and a business partner decided to set up a dedicated instant noodle store in a mall.

A bright orange wall displays instant noodle wrappers from all over Asia. The aisles are categorized by noodle origin: Thai, Chinese, Japanese, Korean, Indonesian – the list goes on.

In-store meals are available for the hungry and impatient. Customers can source fresh ingredients like eggs, seafood, and vegetables to complement and everything is prepared at the cooking stations.

Ungkool’s store opened in late 2021, during which time the lifting of COVID-19 restrictions was already underway.

Rice is Thailand’s main staple, but instant noodles are a pantry staple for many due to cost.

“They have been present in Thai society for a long time. He’s a friend at the end of the month,” Ungkool told CNA, referring to a Thai figure of speech, in which, for many, instant noodles might be the only affordable meal just before payday.

WAR AND WHEAT
The main ingredient of instant noodles is wheat, a commodity that Ukraine produces heaps of. But millions of tons of wheat, as well as other grains like corn and barley, have been stuck in Ukrainian ports because of a Russian blockade.

A recent Turkish-brokered deal will allow exports to resume, a move many hope will lower world grain prices and, by extension, food prices.

For Indonesia, the world’s largest wheat importer, it can’t happen soon enough. According to data from the United Nations food agency, the Food and Agriculture Organization of the United Nations (FAO), Indonesia imported more than 10 million tons of wheat in 2020, of which a quarter came from from Ukraine.

The situation in Thailand is similar. After the United States (US), Ukraine is Thailand’s second largest source of wheat.

PASS THE COST
Agus said the price of instant noodles increased by more than 20% two months ago. He has no choice but to pass it on to his customers.

He rattled off a list of numbers – apparently low – but for a clientele like his, not insignificant: “A bowl of instant noodles usually costs around IDR 6,000 (USD 0.40). Now it is IDR 10,000 (USD 0.66). Add an egg and it’s IDR 13,000 ($0.86).

Food manufacturers worry about a protracted war.

“I’m not too worried about the food supply this year. Indeed, crops were sown last year and harvested this year,” said Indonesian Association of Food and Beverage Producers (GAPMMI) Chairman Adhi Lukman.

“But, if this war continues, it will be difficult to sow new crops, and next year will be more dangerous, not only in terms of higher prices, but also the availability of the commodity.”

Adhi told CNA he estimates food prices could rise by 5% next year, putting more pressure on an Indonesian economy that saw inflation hit 4.35% in June, the highest since 2017.

FINANCE MANAGEMENT
Thailand is also feeling the pinch. Its latest headline inflation rate beat forecasts, coming in at 7.66%, the highest in 14 years. Food prices alone increased by 6.42% over the previous year.

Makers of Thailand’s top-selling instant noodle brands have repeatedly warned that due to rising production costs, they may have to raise the price of the beloved pantry item to THB7 ( $0.19) per packet, the first increase in 15 years.

CNA contacted some of the major Thai manufacturers for comment. All refused to be questioned about it.

But the government takes a different view. She rejected the manufacturers’ proposal to raise prices and listed instant noodles as an “essential item”. This effectively freezes its price to protect people from rising costs.

Other items on the list include basic necessities such as cooking oil, eggs as well as building materials and agricultural products such as cement and fertilizers.

The Deputy Director General of the Department of Domestic Trade at Thailand’s Ministry of Commerce, Chakra Yodmani, expressed some understanding for the companies and their shrinking profit margins, but also added that, like everyone else, they have to manage their finances.

“We are asking manufacturers to cooperate. So they might need to offset it with revenue from products that are still selling well in order to keep operating,” Chakra said.

Back at the instant noodle shop, Ungkool isn’t hoping the prices will stay the same for the foreseeable future.

“We haven’t increased our prices for foreign noodles yet, but I expect our suppliers (for domestic brands) to let us know about the changes soon,” he said. “THB 6 or THB 7 per pack might not be enough for them. »

NO INSTANT REPAIR
In Indonesia, the authorities are going to the source of the problem and are looking for alternatives to wheat. One such crop is sorghum, which can grow in different soil types in the country.

But until then, instant noodles – of the wheat variety – will have to suffice. The ramifications of a conflict halfway around the world affect everyday food stalls like Agus’ warkop. He knows that there is no instant solution and that things are not in his hands.

“I just hope that the war can end soon and prices return to normal,” he said.


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