July 19, 2007

Indonesia's corn-based biofuel program threatens animal feed industry

Plans to develop corn-based biofuel in Indonesia would threathen the country¡¯s animal feed industry, the Indonesian Poultry Raisers Forum (FMPI) said Wednesday ( Jul 19). 

Indonesian Antara news agency quoted FMPI Chairman Don P Utoyo as saying that global corn supplies had fallen as a result of large quantities of corn being used for biofuel.

Corn makes up about half the animal feed ingredient in Indonesia.

Even as global corn prices were now at above US$200 per tonne against US$120-130 in 2005 and US$130-140 in 2006, domestic feed makers are still importing large quantities of corn to meet their need for raw materials, he said.

Indonesia's corn imports climbed to 1.7 million tonnes in 2006 from 400,000 tonnes a year earlier.

If this condition continues the industry would collapse under increasing production costs, he said.

Feed makers were also prevented from raising the price of animal feed because of its adverse impact on small-scale poultry raisers, he said.

With the production cost estimated at Rp3,200-3,300 a kg, animal feed makers could sell their product for Rp3,300-3,400 a kg, he suggested, noting that this is down from the profit margin of  Rp300-400 a kg, he added.

Utoyo also called for government to lower duties on imported corn to zero percent from 5 percent.