September 5, 2006

 

USDA says there is ample room for Indonesian poultry industry to grow

 

Indonesia's poultry industry is set to grow as still-low levels of consumption, an underdeveloped industry and a growing population provided much room for further expansion in the industry despite a host of other problems, a USDA GAIN report released in late August said.

 

Indonesia's broiler meat consumption, at around 3.1 kg per capita, is still well below that of its neighbours, the report said.

 

Despite its dependency on the imported raw material for feed industry, such as corn, soybean meal and breeding stock, the poultry industry has significant potential for further growth, the report noted.

 

Meanwhile, problems such as bird flu, slow growth in purchasing power, along with problems of underdeveloped infrastructure, still need to be addressed.

 

Overall broiler population in 2006 is estimated to be stagnant at around 840 million head, but broiler meat production would be higher due to higher live weights, the report said. Broilers makes up two-thirds of the poultry population. 

 

For 2007, the broiler population is forecast to increase 5 percent, providing 721,000 tonnes of broiler meat. Close to three-quarters of the broiler population is in the central island of Java.

 

The report also added that even as government campaigns have tried to salvage consumer confidence in poultry after bird flu, negative coverage in the media have often damaged confidence and led to temporary shocks in demand.

      

While the primary production industry, especially that of broilers and layer production, has developed since the end of the 1970's, the processing and distribution industry has not seen much development, USDA said.  

 

Around eighty percent of the poultry population are sold in traditional wet markets as most locals prefer freshly slaughtered chicken to frozen ones. Only twenty percent is produced by the 19 integrated slaughterhouses in the country. These supply products to the food manufacturers and food service industries.

 

However, quality from chickens from backyard and unlicensed operations are of questionable quality and arouse safety concerns.

 

As for breedstock, four fully integrated, five semi- integrated and sixty-four non-integrated breeder farms account for the chick production in the country. The sector still relies on importation of breeding stock for boilers and layers from countries such as the US, Holland, and Germany.

 

Feed production for the poultry industry in 2006 is forecast at 6.1 million tonnes or around 55 percent of the feed mill capacity from a total of 26 companies. Feed accounts for sixty to sixty-five percent of poultry production costs, and most of the feed ingredients are imported corn, soybean meal and other protein sources. 

 

With relatively low per capita broiler consumption and an increasing population, potential for further growth exists, the report said.  However, the endemic bird flu problem, purchasing power issues, deficiencies in cold storage, distribution, and processing are obstacles to growth in the intermediate term.

 

Indonesia's ban on imported chicken products, implemented in September 2000 continues. During 2005, Indonesia only imported US$1.3 million worth of poultry products, with 79 percent of this originating from Singapore.

 

The Indonesian government has so far resisted US efforts calling for it to lift the ban. The country has made it clear that the ban is a means to protect its domestic producers. 

 

Even with the bird flu problem in limbo, a few integrators and poultry businesses have expanded their feed meal production and breeding farm investments in anticipation of future growth.