September 5, 2012


Indonesia's 2012 corn imports to fall 35%



Due to high global corn prices, Indonesia's imports may drop by about 35% to two million tonnes this year.


Global grain supplies have been depleted by a devastating drought in the US, the world's top exporter, with US corn futures climbing about 50% since the start of June.


Indonesia overtook Malaysia to become Southeast Asia's largest corn importer last year with 3.1 million tonnes, Tony Kristianto, vice chairman at the Indonesian Corn Board said.


Heavy rains followed by extreme heat in Indonesia, ruined the crop in the main growing areas last year, boosting import numbers.


"Higher prices," Kristianto told Reuters when asked about the reasons for the expected import dip, adding that there may be more plantings in the second half of this year.


"Feed mills are importing at higher prices, so they try and get more local production and pay more."


Southeast Asia's largest economy gets about 60% of its corn imports from Argentina and the US, with India an alternative supplier.


Feed mill demand for corn accounts for about 70% Indonesian consumption of about nine million tonnes per year, added Kristianto, whose group was established 10 years ago.


Earlier this year, the Indonesian Feed Mill Association said corn imports would fall by two million tonnes to 1.5 million tonnes, due to a surge in domestic output.


"The outlook is that the US corn price is going higher and we will then follow it," Kristianto said.


In January, Indonesian feed mills paid around IDR2,500 (US$0.26) per kilogramme of corn, but this had now risen to almost IDR3,500 (US$0.37) per kilogramme, Bogor-based Kristianto added.


Rising prices will lead to an increase in slaughtered birds in the poultry industry, while more Indonesians are likely to switch to meat substitutes like tofu and tempe that are cheaper.


Corn output in the archipelago will be between 8-9 million tonnes this year, little changed from last year, added Kristianto, a consultant with more than 25 years experience in the agriculture industry.


Indonesia's main corn crop is usually in the first quarter, with a mid-crop around September.


"Not a big increase," he added. "We have a systemic problem in our country ... in food crops we have problems with land, policy, systems -- the autonomous system in Indonesia ruins all efforts to grow agriculture.


"Central government may have plans or programmes but they cannot be executed because the bupati (district head) doesn't support it."


About 30% of Indonesian corn is grown in East Java, with Central Java, South Sulawesi and North Sumatra among the other producing regions.