August 5, 2015
Indonesia's bid for self-sufficiency in food products has led to a recent halt in the issuing of import permits for corn used in feed mills. The decision could be followed by rules which will render state procurement agency, Bulog, as the sole importer of corn from 2016 onwards.
Following the suspension, Indonesia's corn supply and demand will be reevaluated, said Muladno, the director general of animal husbandry at the country's agriculture ministry.
He also noted that granting Bulog the sole authority of importing corn is a temporary measure. Nevertheless, the agency's responsibilities would be expanded further, which include helping to build larger local stockpiles of beef and soybean. The action is in response to inflated grain prices in 2012 after the worst drought to hit the US.
Rising prosperity, coupled with an increased demand for poultry, drove Indonesian demand for corn in recent times. However, the import volume for the grain is expected to reach three million tonnes in 2015, lower than 3.1 million tonnes seen in 2014, and 3.5 million tonnes required by the feed milling industry, said the Indonesian Feedmills Association.
On the other hand, a higher domestic production of corn is expected this year, at 20.67 million tonnes compared to 19.01 million tonnes last year.
Indonesia, whose main source of corn imports are Brazil and Argentina, implemented a 5% tariff on deliveries into the country and requires applications for official import permits.
The government's recent moves are likely to affect Cargill's interest in establishing a corn milling plant in the country. The company wants to be able to use imported corn if those from local sources are found to be of lower qualities or quantities.