Poultry prices continue to be on the rise possibly hurting corporation who rely heavily on their supply.
Indonesia’s government efforts to gain a larger self-sufficiency in food production has put a policy in place that has restricted the amount of corn imports, which has already affected rice and bean prices.
This policy is expected to also increase the price of poultry coming from Indonesia.
From just a year ago, home-grown chicken is up by 6 percent costing $5 per kg says the Trade Ministry data.
Food prices in general have also increased 6 percent in a years span.
Indonesian President Joko Widodo has been pushing for self-sufficiency since the beginning of his power in October. Many restrictions on imports have been made and possibly caused the closures of sugar refineries and higher prices in food.
Secretary general of Indonesian Feedmills Association (GPMT), Desianto Budi Utomo told Reuters that Southeast Asia’s biggest economy is only projected to import 3 million tonnes as compared to the 3.1 million tonnes last year.
Utomo says, “We should be importing 3.5 million but, considering the policy of the government, we are not supposed to import more than last year. There is a big push from the government not to import like last year. Local corn (prices) will increase. The price for feed mills will increase.”
With the increase of wealth in Indonesia there has been more of a demand for poultry and corn.
Indonesia receives their imports from Brazil and Argentina. In order to do so there is a 5 percent import tariff is imposed as well as an importers application to receive a government permit.
The poultry sector has made a hefty investment being worth more than $4 billion a year and is even projected to grow with the Muslim population’s demand for meat increases.
In Indonesia the 82 feed mills are at a 75-80 percent capacity according to Utomo. Right now holding 21.5 million tonnes a year and increasing by 2.5 million tonnes this year.
The government is hoping that a higher output of corn will make up for the lower imports.
The Agriculture Ministry projects a rise of 6 percent in corn production for this year to 20.33 million tonnes.
Yet, the U.S. Department of Agriculture estimates something different in the Indonesian corn production for the 2014/15 year.They see 9.4 million tonnes an increase of last years 9.1 million tonnes. GPMT also agrees with their findings.
To better production, they are building more dams, modernising irrigation systems, increasing planting areas for staple foods and providing easier access to credit for smaller farmers.
The demand for food is increasing to Ramadan in June which can cause many more to disfavor Widodo’s policies.
Still the policy will not undergo any changes according to the head of the centre for trade policy harmonisation at the Trade Ministry, Djatmiko Bris Witjaksono.
“This government has put food security top, as a national issue. We want to increase self-sufficiency. The public has the same line of thinking, and industry also,” says Witjaksono.
An increase in poultry prices are surfacing worldwide and causing many problems for this in demand for the meat.