Indonesia’s poultry farmers opt for different strategies

With low prices on the domestic market, poultry producers in the Southeast Asian country are finding various solutions to improve their long-term prospects. While one leading chicken company is exploring new export opportunities, another has made a downstream acquisition in the food supply chain.

Bukhanovskyy I shutterstock.com
Bukhanovskyy I shutterstock.com

In Indonesia, millions of broilers and hatching eggs will be destroyed over the comings weeks.

According to Deccan Herald, the country periodically experiences an excess of domestic supply over demand. The inevitable result has been a fall in producer prices, which have now dropped to the point where they do not even cover feed costs.

Following last year’s destruction of three million birds, Indonesia’s agriculture minister has ordered farmers on the island of Java to cull a further 4.4 million chickens. Furthermore, the government instructed hatcheries to destroy 14 million hatching eggs before September 5.

As the supply of chickens reduces each month to December, the ministry is forecasting a corresponding price recovery.

Falling chicken prices

As chicken is regarded as an essential food item, the government of Indonesia sets some controls if the domestic market price moves outside certain limits.

In past months, poultry producers have reported that the prices they receive have fallen even below feed costs. At the same time, prices of feed ingredients have risen, they say.

For the first three months of this year, the average price was just 7,000 rupiah (IDR; US$0.47) per kilo, according to the chairman of the chicken producers’ association. This compares with the government-set minimum price of IDR19,000 per kilo.

Lower chicken prices are among the factors contributing to Indonesia’s record-setting low inflation rate for August.

According to The Jakarta Post, reduced prices are linked to weakened consumer purchasing power arising from the coronavirus (COVID-19) pandemic.

It reports a contraction of more than 5% for the second quarter of this year. During the month of August alone, a reduction of almost 0.9% was recorded for the food, beverage, and tobacco sector.

First chicken exports to Japan

Despite an overall decline in global trade linked to the pandemic, one Indonesian company has shipped its first ever exports of chicken products to Japan.

In its first shipment, PT Malindo Food Delight sent six tons of chicken products, according to The Jakarta Post in a separate report. Comprising primarily nuggets and sausages, the products were worth around IDR156 million.

Malindo Food Delight reports annual production of 9,000 tons of such products. As a result, parent company Malindo Feedmill derives around 4% of its revenue from this subsidiary.

Welcoming news of the achievement, the agriculture minister urged companies like Malindo Food Delight to help stabilize domestic prices by purchasing more chicken from Indonesian farmers.

A subsidiary of Leong Hup Holdings of Malaysia, Indonesia’s Malindo Feedmill produces animal feeds, as well as being a vertically integrated poultry producer with affiliates including Malindo Food Delight.

Japfa Comfeed acquires chicken nugget manufacturer

One of Indonesia’s largest listed poultry feed companies, Japfa Comfeed, has announced the acquisition of So Good Food from Jupiter Foods dan Annona.

With its subsidiary Ciomas Adisatwa, Japfa Comfeed will pay IDR1.21 trillion for the producer of chicken nuggets, dumplings, and other products, reports Jakarta Globe.

Japfa Comfeeds is a subsidiary of Singapore-based Japfa Ltd., which produces animal feeds for the domestic market as well as in Myanmar, Indonesia, and Vietnam. Feeds are used in its own operations, as well as sold to third parties.

Microloans available to Indonesia’s poultry producers

Along with agriculture and fisheries, poultry production is among the priority sectors to be offered new loans, reports Salaam Gateway.

This year, the Bank Negara Indonesia Syariah has announced it will disburse a total of IDR700 billion in microfinance to around 7,700 operations active in these and other key activities.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

Page 1 of 1576
Next Page