December 6, 2024

 

Indonesia set to boost corn use in feed production by 2024/25

 

Indonesia's corn industry is set to experience a resurgence in the marketing year (MY) 2024/25, driven by rising demand from the feed industry and a recovering economy.

 

According to a US Department of Agriculture (USDA) report, feed corn consumption is projected to reach nine million tonnes, up from 8.6 million tonnes in MY 2023/24. This growth is fueled by an improving economy, growing demand for poultry feed, and a population increasingly reliant on poultry meat as a staple protein source.

 

In recent years, Indonesia's corn sector faced numerous challenges, including local production shortages and soaring prices. These issues significantly impacted the feed industry, leading feed mills to reduce corn in their formulations to just 38–40% by substituting it with imported wheat, which was more competitively priced.

 

However, by mid-2024, corn stocks at feed mills had risen by 17.4% compared to the same period in 2023. Optimism is growing as better yields are anticipated for the upcoming year, with corn use in feed formulations expected to rise to 48%. This marks a critical step toward recovery for both the corn and feed industries.

 

The feed mill sector is pivotal in Indonesia's agricultural ecosystem. Spread across 10 provinces, the country boasts 110 feed mills operated by 44 companies, most of which are based on Java Island.

 

In 2023, the total installed capacity for poultry feed reached 27.6 million tonnes, although mills operated at only 70–75% of this capacity. Poultry feed dominates the sector, accounting for 90% of total production, with aquafeed contributing 6% and cattle and swine feed making up the remaining 4%.

 

Despite challenges, the poultry industry remains a cornerstone of Indonesia's animal feed market. In 2023, the sector faced a decline in bird populations due to overproduction of broilers and layers. This prompted the Ministry of Agriculture (MOA) to implement culling measures, including reducing day-old chick (DOC) parent stock by 2.5 million birds, which resulted in a cumulative decrease of 70.8 million DOC final stock.

 

However, the industry is poised for recovery, with the poultry population forecast to grow by 6% in 2024. Rising poultry meat demand and economic expansion are expected to drive this growth, with per capita poultry meat consumption climbing from 11.63 kilogrammes in 2022 to 12.58 kilogrammes in 2023.

 

Corn, a secondary crop after paddy, remains vital to Indonesian agriculture. The country's primary corn-producing regions include Java, which accounts for 40% of national output, followed by Sulawesi and Sumatra at 24% each, and Nusa Tenggara at 10%. Planting cycles are closely tied to Indonesia's seasonal patterns, with the first cycle occurring from October to February, the second from March to June, and the third from July to September. Proximity to water sources also allows some regions to have up to three planting cycles annually.

 

But, the 2023/24 production cycle faced setbacks due to El Niño-induced delays in planting and harvesting. USDA estimates indicate that the harvested area and production for 2023/24 will decline to 3.6 million hectares and 12.2 million tonnes, respectively, marking a 2.7% and 3.9% reduction from earlier projections.

 

The first major harvest, typically held between January and February, was delayed to March and April 2024. Despite these challenges, improved rainfall and favorable conditions by the end of 2024 are expected to boost production to 12.5 million tonnes in 2024/25.

 

The seed industry plays a crucial role in supporting this recovery. In 2024, projected seed demand stands at 45,121 tonnes for three million hectares of farmland. While the government provides subsidised seeds for two million hectares, farmers increasingly prefer commercial seeds due to their higher yields. Hybrid corn seeds are projected to cover 80% of the cultivated area in 2023/24, a notable increase from 72–75% in the previous year.

 

Despite declining prices during the second harvest of 2023, corn prices remain relatively high, incentivising farmers to prioritise corn over other secondary crops.

 

Combined with favorable weather conditions and growing demand from the feed and poultry industries, Indonesia's corn sector is well-positioned for significant growth in 2024/25. The future of the industry looks brighter than ever, driven by improved productivity and robust market demand.

 

About EFL AG-DATA

 

EFL AG-DATA is a startup incubated by Singapore's Nanyang Technological University's Innovation and Enterprise Company (NTUitive) Incubator Program. It is developing an agricultural hub that will revolutionise the feed-to-meat supply chain in China and Southeast Asia countries through data-driven solutions. EFL's mission is to empower farms through innovative data-based services that solve complex problems and enhance productivity.

 

- EFL AG-DATA