January 11, 2013

Indonesia's 2013 sausages, nuggets prices may rise 17.5%

Triggered by limited supply of raw materials, an increase in minimum wage workers, and an increase in electricity prices, Indonesia's selling price of processed foods made from raw meat, such as sausages and nuggets, will climb this year.

Raw materials accounted for most of the cost of production of beef-based processed foods and chicken meat. "The cost of raw materials could be 50% of the total cost of production, "said Ishana Mahisa, Chairman of the National Meat Processor Association (Nampa).

Nampa projected selling price of processed food products based on beef and chicken meat rose to 17.5% this year. Currently, the price of beef-based processed foods like sausages is at IDR25,000 (US$2.6) per kilogramme (kg) for the low quality. The price of medium quality sausages range from IDR30,000-35,000 (US$3.1-3.6) per kg, and the price of premium sausages above IDR50,000 (US$5) per kg.

In addition to the availability of raw materials, increases in minimum wages and basic electricity tariffs also driving up prices.

For around the difficulty of obtaining raw beef producers to substitute to alternative materials like chicken, is usually meat-based processed food manufacturers have two kinds of variations of business, i.e., processed chicken meat and processed beef. "It all depends on the focus of his business, where the priority of meat," said Ishana.

Nampa members as of today have a total of 29 companies. Of this amount, more than half are have products made of chicken meat. Happily, the allocation of 32,000 tonnes of frozen beef imports for 2013 is, weighing 14,500 tonnes to ration member of Nampa. Last year the government did not allocate for Nampa. In addition, although prices rise, producers of processed food production sector are optimistic to keep growing this year.

Eko Sandjojo, Vice President Director of PT Sierad Produce Tbk, predicted prices of processed meat products to grow no more than 10% this year. "The increase is also considering business competition," said Eko.

Not only large manufacturers, entrepreneurs processed foods classes prepared to hoist the SME selling prices. Goddess Diana, Secretary General of Association of Meat Processing SMEs and Household Scale (Aspedata), said the selling price of processed food products could rise by an average of 10% this year.