Indonesian feed millers are expecting their output to increase 7-8 percent this year due to rising demand from the poultry and aquaculture sectors, according to industry officials.
Feedmills are expected to use about 60 percent of capacity this year compared with 40-50 percent in recent years, said Thomas Bauer at Rabobank.
Indonesia produced 7.6 million tonnes of feed last year, while installed capacity is about 15 million tonnes, said Firman Gunadi, secretary general of the Indonesian Feedmillers Association.
Gunadi said more people are turning to cheaper animal protein sources such as chicken, instead of beef and fish, amid fuel price hikes.
Chicken sales during the first half of 2008 increased 6 percent on-year to 520,000 tonnes, while egg sales rose 2.8 percent on-year to 430,000 tonnes, said Hartono, head of the poultry marketing information centre.
The poultry sector consumes about 85 percent of Indonesia's feed output.
Soymeal imports are likely to increase to 2-2.5 million tonnes this year from 1.9 million tonnes last year, Gunadi said. Soymeal accounts for 20 percent of raw material for feed production. However, Indonesia does not produce soymeal and instead imports for domestic use.
The Feedmillers Association expects corn imports to fall to less than 400,000 tonnes this year due to higher domestic output, compared to the 700,000 tonnes imported in 2007.
Indonesia's largest integrated poultry company, PT Charoen Pokphand Indonesia Tbk, projects feed output to increase about 10 percent this year and utilisation rate to jump to 60 percent this year.
Another integrated poultry firm, PT Sierad Produce Tbk, also expects total production to increase, which would boost sales revenue to US$210.7 million this year compared to US$168.6 million last year.
Charoen's vice president Thomas Effendy said price will increase along with industry volume growth, and it does not matter that the price raw materials has increased early this year.