September 19, 2011

 

Indonesia's animal feed industry demands more corn

 

 

Heightened by growing appetite for poultry and other meats, demand for corn from Indonesia's animal feed industry will increase 4% this year, said an industry group on Friday (Sep 16).

 

Indonesian Feed Mill Association (GPMT) chairman Franciscus Xaverius Sudirman said that Indonesia's domestic feed industry will consume 10.3 million tonnes of corn in 2011, against 9.9 million last year and 9.7 million in 2009.

 

"The poultry industry is growing," he added, speaking ahead of the SE Asia US Agricultural Co-operators Conference, which opens in Bali on Sunday. "More people consume chicken and our GDP per capita is increasing."

 

More affluent Indonesians are turning away from rice, once the staple diet, towards more bread and meat-based foods, including fast-foods. Indonesians consume about 430,000 tonnes of beef annually, but figures for poultry consumption were not immediately available.

 

USDA statistics show that for the year ending September 2011, Indonesia imported 2.5 million tonnes of corn, making it the 11th biggest importer in the world.

 

Indonesia is home to some 240 million people and its economy, Southeast Asia's largest, is expected to grow about 6.6% this year, boosted by domestic consumption and mineral exports.

 

Last month, Indonesia's finance ministry said corn production is seen at 24 million tonnes next year, a rise of almost 40% against the earlier 2011 estimate of 17.39 million tonnes from the statistics bureau.

 

But a number of corn-producing areas have suffered from failed harvests because of bad weather, and Sudirman said he believed this data was no longer reliable.

 

In early July, the association forecast corn imports to rise to more than three million tonnes, up from 1.5 million tonnes in 2010, as domestic output fell.

 

"We project 2.5 million," said Sudirman, who is also a director at Sierad Produce. "Production in Indonesia will be pretty low this year, but statistics show a constant increase every year."

 

Indonesia relies on Argentina for around 40% of its corn imports and 20% from the world's biggest supplier, the US. Other countries, including India and Cambodia, make up the rest.

 

"Quality concerns," said Sudirman, when asked why Argentina and not the US was Indonesia's top supplier. "US corn is very bad quality so it is better that we import from Argentina."

 

Concerns about tight stocks of corn in the US, has pushed CBOT corn futures to record highs recently. Front-month corn futures <Cc1> hit an all-time peak in June just below US$8 a bushel, and Sudirman expects such levels to be tested again in 2011.

 

"We are worried, like in 2008, that financial markets and fund managers, move to commodity markets and they play in commodities' speculation," Sudirman said on prices.

 

"We have no power to stop this," he added. "We hope national productions increase, and we fulfil consumption ourselves."