With a growing population and per capita chicken consumption below some neighboring countries, the long-term outlook for poultry production in Indonesia would appear to be bright. However, the local market is currently suffering from a combination of oversupply of chicken meat and rising inflation. Consumers are buying less meat, and the government is now intervening and placing more controls on the broiler industry.
While a number of investment in the sector are still occurring, consolidation is also taking place, and production of day old chicks (DOCs) is being more tightly regulated.
Charoen Pokphand Indonesia, for example, the country’s largest poultry integrator, is reported to have reduced its day old chick output by 30-40 percent in response to government controls. It is also said to have significantly scaled back its capital investments this year.
At the same time as the company has been forced to cut back production of DOCs it has also purchased Sierad Produce’s breeding and hatchery assets, located in Banten province, for a reported price of US$37 million. The purchase is expected to add to CP Indonesia’s output of DOCs and processed chicken products by 5 percent.
It has also been announced that Great Giant Pineapple, a subsidiary of Gunung Sewu group, has reportedly offered to buy the remaining 49.9 percent of Sierad Produce that it does not already own for US$29.64 million.
To further resolve oversupply difficulties in the poultry sector, the Ministry of Agriculture has announced that it is in the process of contacting breeding companies to find out exactly how many birds they produce, and that it intends to hold discussions with them to ensure that supply is better tailored to local market conditions.