June 13, 2005

 

Indonesia corn output to rise slightly in 2005-06

 

 

Corn production in Indonesia is expected to grow slightly to 6.6 million tonnes in 2005-06, as newly reopened areas become more productive. The output in 2004-05 is estimated at 6.5 million tonnes.

 

According to a USDA forecast, corn use would only rebound slowly, hindered by the continued prevalence of bird flu in the poultry sector. Anticipating slight growth in domestic output, combined with sluggish growth in local demand, imports would reach only 1.1 million tonnes in 2005-06. The local corn industry continues to source local corn first and then turn to the international market when domestic supplies dwindle. 

 

Yields remain low as hybrid corn seed use makes up only about 20 percent of total corn planting areas. The high price of hybrid seeds (from Rp20,000 or US$2.15/kg to Rp30,000 or US$3.23/kg, compared with Rp1,750 or US20 cents/kg for local seeds) and lack of intensive farming capacity required for hybrid corn hamper increases in hybrid seed plantings.

 

Quarantine procedures have also caused difficulties in importing (parent) seeds and contribute to the lack of hybrid seed availability, which make the price of hybrid seeds high. The total planting areas using hybrid seeds declined from 675,000 hectares in 2004 to 550,000 hectares this year. 

 

Improper post harvest treatment and lack of storage/drying facilities are also constraints to improving corn quality and marketing. 

 

The animal feed industry consumes around 50 percent of all Indonesian corn. This percentage has declined due to the Avian Influenza outbreak in early 2005. Feed industry demand is expected to increase somewhat in 2005-06 to 3.7 million tonnes. 

 

Imported corn is used mainly to produce poultry feed. Assuming that the AI outbreaks are only sporadic and are contained, total compound feed production (including self-mixing poultry feed) is expected to rebound to 7.4 million tonnes in 2005-06.

 

Given expectations for a slight increase in domestic production, but only sluggish demand growth, imports are forecast to remain stable at around 1.1 million tonnes in 2005-06.

In March 2005, farm gate prices of local corn in major producing areas (Lampung) ranged from Rp1,300/kg (US$139.8/tonne) to Rp1,400/kg (US$150.5/tonne) in East Java. Prices range from Rp1,450/kg (US$155.9/tonne) to Rp1,500/kg (US$161.3/tonne) delivered to feed mills in Jakarta.

 

Despite increasing feed ingredients (corn and protein meal) prices, average feed prices fell from reported levels the previous year. Local sources indicate price of Rp2,750/kg (broiler feed) in 2005 compared with Rp2,925/kg in 2004; and Rp1,750/kg (layer feed) in 2005 compared with Rp2,223/kg in 2004.

 

Indonesia corn (in 1,000 hectares / 1,000 tonnes)

 

	2003	2004	2005
			estimate
Market Year begins	10/2003	10/2004	10/2005
Area harvested (1,000 ha)	3,200	3,300	3,300
Beginning stocks (1,000 tonnes)	584	834	834
Production (1,000 tonnes)	6,350	6,500	6,600
Total Market Year Imports (1,000 tonnes)	1,350	1,100	1,100
Oct-Sep Imports (1,000 tonnes)	1,350	1,100	1,100
Total supply (1,000 tonnes)	8,284	8,434	8,534
Total Mkt Yr Exports (1,000 tonnes)	100	100	100
Oct-Sep Exports (1,000 tonnes)	100	100	100
Feed Dom. Consumption (1,000 tonnes)	3,750	3,800	3,700
Total Dom. Consumption (1,000 tonnes)	7,350	7,500	7,600
Ending stocks (1,000 tonnes)	834	834	834
TOTAL DISTRIBUTION	8,284	8,434	8,534

 Note: Feed domestic consumption includes requirements from the small-scale poultry industry  producing

         self-mixing poultry feed (at average of approx. 500,000 tonnes/year).