US Tariffs on Canada: A New Opportunity for Wheat Exports to Indonesia?

The United States’ imposition of tariffs on Canadian goods and services has accelerated Canada’s search for alternative markets. While the US remains a key trading partner, Canada’s agricultural sector should look toward emerging economies that offer long-term growth potential.

Indonesia, one of the world’s largest wheat importers, presents a strategic opportunity for Canadian exporters. The country does not produce wheat domestically, yet its demand continues to rise due to urbanization, dietary changes, and a growing middle class. With wheat imports reaching 11 million metric tons (MMT) in 2023 and projected to exceed 12 MMT by 2024/25, Indonesia’s market remains highly attractive.

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Indonesia’s growing reliance on wheat imports

Historical import trends

Indonesia has been consistently importing over 9.5–11.2 million MMT of wheat annually over the past decade. The breakdown of wheat import volumes highlights this steady demand:

• 2015: 10.045 MMT
• 2016: 10.190 MMT
• 2017: 10.763 MMT
• 2018: 10.934 MMT
• 2019: 10.586 MMT
• 2020: 9.995 MMT
• 2021: 11.229 MMT
• 2022: 9.500 MMT
• 2023: 11.000 MMT

Despite fluctuations, demand remains strong, driven by population growth and changing consumption patterns. The forecast for 2024/25 predicts a record 12 MMT in wheat imports, with long-term annual growth estimated at 2-3 percent through 2029/30.

Key industries driving demand

Indonesia’s wheat consumption is primarily fueled by three key industries:

Instant noodles: A staple in every household

Indonesia ranks as the world’s second-largest consumer of instant noodles, with 14.54 billion servings consumed in 2023. Instant noodles are a staple in Indonesian households, particularly for low- to middle-income consumers, making them a dominant force in wheat demand. The affordability and convenience of instant noodles ensure that this segment will continue to drive wheat imports for the foreseeable future.

Bread: A growing market in urban areas

Bread consumption is rising, particularly among Indonesia’s expanding urban middle class. The bread market is projected to generate US$15.33 billion in revenue by 2025, with a compound annual growth rate (CAGR) of 4.43 percent from 2025 to 2030. Current per capita wheat consumption for bread stands at 4.7 kg per year, with projections indicating an increase to 6.6 kg by 2030.

Biscuits & snacks: A rapidly expanding industry

The snack food industry, including biscuits and other wheat-based snacks, is another high-growth segment. The market is expected to reach US$4.54 billion by 2025, with a CAGR of 8.74 percent from 2025 to 2030. By 2030, snack food consumption is projected to hit 1.18 billion kg, reinforcing the steady demand for wheat imports.

The flour milling industry, which includes 30 mills with a total installed capacity of 14.4 million tons, plays a crucial role in ensuring stable wheat demand.

Canada’s competitive edge in the Indonesian market

Current market share and positioning

Canada is Indonesia’s second-largest wheat supplier, exporting 2.4 MMT annually, behind Australia, which holds the largest market share (4.3 MMT, 34.2 percent). Other competitors include:

• Russia: 1.0 MMT
• Bulgaria: 1.0 MMT
• Brazil: 0.8 MMT
• Ukraine: 0.7 MMT
• United States: 0.4 MMT
• Argentina: 0.2 MMT

Despite this competition, Canada maintains a strong position due to its reputation for high-quality wheat, particularly hard red spring wheat, which is ideal for flour production.

Why Canadian wheat has an advantage

• Higher protein content – Preferred by flour mills for its strong gluten quality, making it ideal for bread and high-end food products.
• Consistent supply & quality – Canada’s advanced grain-handling infrastructure ensures low variability in wheat quality.
• Trade diversification needs – Indonesia seeks to diversify its import sources, reducing dependence on Australian and Russian wheat.

With CEPA in place, Canada can further improve its position by reducing costs for Indonesian importers, creating a price advantage over US and European wheat.

CEPA: Enhancing trade and investment for Canadian exporters

Wheat tariff reductions and competitive pricing

The Canada-Indonesia Comprehensive Economic Partnership Agreement (CEPA) significantly boosts Canada’s wheat trade prospects by:

• Eliminating or reducing import tariffs on Canadian wheat, improving cost competitiveness.
• Lowering non-tariff barriers, such as food safety inspections, makes it easier to access the market.
• Strengthening long-term trade relations, giving Canadian suppliers more stability in the Indonesian market.

Investment opportunities beyond wheat exports

CEPA facilitates wheat exports and encourages Canadian agribusinesses to invest in Indonesia’s food supply chain, opening doors for long-term partnerships, joint ventures, and infrastructure development.

Canadian companies can explore investments in flour milling facilities through equity stakes in Indonesian mills or joint ventures that introduce Canadian wheat blends tailored to local preferences. Additionally, the baking and processed food sectors present opportunities for Canadian bakery brands to enter the Indonesian market, tapping into the rising demand for premium wheat-based products.

Expanding supply chain infrastructure is another key area. Investing in grain storage facilities, dedicated wheat terminals, and distribution hubs will reduce costs and enhance efficiency, making Canadian wheat more competitive.

A timely opportunity for growth

Indonesia’s expanding wheat consumption, strong flour milling industry, and long-term import reliance make it a prime target for Canadian wheat exporters. With US tariffs prompting Canada to diversify its trade partners, Indonesia presents a strategic opportunity for Canadian businesses to establish a long-term foothold in one of Southeast Asia’s fastest-growing food markets.

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