August 18, 2015
Indonesia's corn import ban upsets feed milling industry
480,000 tonnes of corn shipments have been left unloaded at the Indonesian ports of Medan, North Sumatra; Jakarta and Surabaya, East Java, following a ban imposed by the government on such imports, The Jakarta Post reports.
With permits to discharge corn-carrying vessels yet to be obtained, it resulted in a daily fee of US$13,000 to be footed by businesses for the extraneous periods that the ships are still in use, said Desianto Budi Utomo, the secretary-general of the Indonesian Feed Millers Association (GPMT). He worries that the situation could adversely affects the relationship between the feed milling sector and its suppliers.
Utomo added that the sector has little time to accommodate recent developments since the government's decision to suspend corn imports had come abruptly. Without a deadline set for its cessation, the ban is effected to help raise domestic corn production.
In addition, Utomo criticised the government's failure to provide a buffer volume of corn, extracted from local stockpiles, to mitigate any shortages that could ensued from a halt of imports. "If they can provide a buffer stock for two million tonnes, then imports can be stopped," he said.
Utomo also warned that the ban could likely provoke price increases of local corn.
Indonesia plans to achieve a production volume of 20.31 million tonnes of corn in 2015, a rise of 4.1% from 19.5 million tonnes in 2014. While about 22% to 27% of the country's output will be set aside for feed milling, the percentages are inadequate for the targeted amount of feed to be produced this year, with 8.5 million tonnes of corn required, according to Utomo. About 5.5 million tonnes of corn can be gathered from local productions, reflecting a deficit of around three million tonnes.
In the June this year, the feed milling sector imported 1.65 million tonnes of corn, compared to 3.1 million tonnes in 2014, based on data from the Central Statistics Agency (BPS).
GPMT is now considering farmer groups in remote areas to meet corn demand but the move could mean additional costs for shipments. "It would not be cost-efficient as we would have to go to remote areas, while major animal feed plants require almost 2,000 tonnes of corn per day," Utomo explained.
Since poultry feed takes up 92% of produced corn, the other alternative is to slash the percentage down to a range of 40% to 45%. The reduction can be facilitated by employing grain and sorghum as replacements but which will induce higher costs due to a need for additional enzymes.