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May 5, 2015

 

Now, poultry prices set to rise from Indonesia's self-sufficiency policy

 

 

Indonesian poultry prices are set to climb as the government curbs corn imports to push for greater self-sufficiency in food production, a policy that has already led to price inflations in rice, beef and other staples, Reuters reports.

 

The cost of local chicken has already risen about 6% from a year ago to almost 60,000 rupiah (US$5) per kg, according to Trade Ministry data. Overall food prices were also 6% higher in March than a year before, according to official data.

 

Indonesian president Joko Widodo is aggressively pursuing self-sufficiency targets in various foodstuffs and curbs on imports have been blamed for spikes in food prices.

 

Indonesia will now import three million tonnes of corn this year compared with 3.1 million last year, Desianto Budi Utomo, secretary general of the Indonesian Feedmills Association (GPMT), told Reuters. Accordingly, the price for feed mills is expected to increase, Utomo said.

 

Indonesian corn demand has grown in recent years due to rising incomes and higher demand for poultry, a meat popular with its Muslim population.

 

Most of Indonesia's 82 feed mills are running at about 75-80% of capacity, Utomo said. They can handle 21.5 million tonnes a year, which will rise by 2.5 million tonnes this year.

 

While the Agriculture Ministry estimates corn production will rise 6% this year to 20.33 million tonnes, the United States Department of Agriculture forecasts just 9.4 million tonnes, up from 9.1 million. Surprisingly, the GPMT broadly agrees with the US figures.

 

Cargill is considering building a corn milling facility in Indonesia, Jean-Louis Guillou, CEO for Cargill Indonesia, said in an email. But for that investment to be viable, it would want the option to import corn if domestic supplies were lacking in quality or quantity.

 

Just last month, a public-private partnership between Cargill, Monsanto and the Indonesian government since 2012 aimed to double the country's corn production capacity following the government's self-sufficiency programme, Guillou had told the Jakarta Globe.

 

If things could get any worse, food demand is likely to rise ahead of Ramadan in June.

 

But government policy will not change, said Djatmiko Bris Witjaksono, head of the centre for trade policy harmonisation at the Trade Ministry.

 

"This government has put food security top, as a national issue," Witjaksono said. "We want to increase self-sufficiency. The public has the same line of thinking, and industry also."

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