October 16, 2008


Indonesia poultry feed producers benefit from crisis--for now

Indonesia's poultry feed producers, the world's fourth most populous country, are benefiting from the global financial crisis as prices of their ingredients plunge, their industry association chairman said.
Corn fell by 52 percent from its record US$7.9925 a bushel on June 27 and soymeal tumbled 45 percent from its peak July 3 as global credit markets froze, depriving companies of financing, slowing economic growth and cutting commodity demand.
However, Budiarto Soebijantoof the Indonesian Feedmill Association said they are worried on the crisis hurting the banks as there will be liquidity problems, making loans for expansion and letters of credit to finance trade difficult.
Indonesia is among the countries in striving to prevent the global financial meltdown, which has crippled US and EU banks, from spreading. The government of the US$433 billion economy will allow commercial banks to use loans as collateral, cut reserve ratios and ease accounting rules in a bid to ease credit access.
The global loan crisis will not affect domestic feed demand as long as the economy stays strong and stable, Soebijanto said.
Poultry consumption is expected to remain in its level as political groups spearhead food as part of their campaigns before the presidential and parliamentary elections next year, he added.
Indonesia's biggest producers are PT Charoen Pokphand Indonesia, PT Japfa Comfeed Indonesia and PT Cheil Samsung Indonesia.
Soymeal for delivery in December and January to the port of Jakarta has dropped to US$360 a tonne including freight costs in the past few days from US$460 a tonne, said Soebijanto. Corn for the same delivery fell to around US$230 a tonne from US$330 a tonne.
The country's feed output will climb to 8.5 million tonnes next year from 8.1 million tonnes this year and 7.6 million tonnes in 2007, he said. That compares with an installed capacity of 13 million tonnes. Corn imports will fall this year to 300,000 tonnes from 650,000 tonnes in 2007 and feed makers may buy mostly from the domestic market next year, he said.
The country also aims to be self-sufficient in corn in 2008, after output gained 14 percent in 2007 and 12 percent this year on greater area and productivity, Agriculture Minister Anton Apriyantono said.
On the other hand, soymeal imports will climb to 2.4 million tonnes this year from 2.3 million tonnes in 2007 and may increase as much as 7 percent in 2009 if economic growth is sustained.
Under less optimistic scenario, imports will be flat but if the economy is strong and food prices drop, Soebijanto said soymeal imports will increase by 5 to 7 percent.
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