Topic - January 2016

Indonesia mulling 3 million tons of corn imports in 2016

Indonesia may import 3 million tons of corn in 2016, an industry ministry official said, amid growing demand for the grain from food industries and millers, and following a disruption to the country’s corn imports earlier last year.

Southeast Asia’s largest economy, which imports corn mainly from Argentina and Brazil, stopped issuing corn import permits to feedmills in July last year, with the government making a broad push for food self-sufficiency and channelling imports through state procurement agency Bulog.

Indonesia’s demand for corn has grown in recent years due to rising wealth and resultant higher demand for poultry, and the tightening of corn imports was expected to lead to increases in poultry and egg prices as farmers paid more for their feed.

Demand for corn from Indonesian feedmills and food industries is expected to grow 4 percent to 13.8 million tons in 2016 from 13.26 million tons last year, Panggah Susanto, Director General of Agricultural Industries at the Industry Ministry, said recently as reported by Reuters. An import of 3 million tons this year would be just above an estimate of less than 3 million tons in 2015 – and below the 3.1 million tons taken in 2014.

The issue of imports is still subject to government discussion, Susanto said, adding that floor and ceiling prices may be set for corn purchases.


Salim Group, CAB Cakaran plans poultry joint venture

CAB Cakaran Corp Bhd signed a memorandum of understanding with Indonesia-based diversified entity Salim Group for a proposed poultry joint venture (JV). In a statement to Bursa Malaysia last month, chicken breeder CAB Cakaran said the MOU indicated both companies’ intention to undertake poultry operations in Indonesia. “This MOU is a formal confirmation of both parties’ intention to study the possibilities of JV in Indonesia, for the purpose of  establishing a fully-integrated poultry business in Indonesia.

“The MOU is subject to terms and conditions as stipulated in the MOU and is intended as an outline of the present understanding and commitments between the parties and may be subject to change in the course of implementation hereto,” CAB Cakaran said as quoted by the Edge Financial Daily.

CAB Cakaran said the MOU was a prelude to a JV agreement with Salim Group, the businesses of which, included food and fast-moving consumer goods. According to CAB Cakaran, the firm and Salim Group plan to establish a new JV company in which, Salim Group and CAB Cakaran will own 90% and 10% respectively.

“However, CAB will have the option to increase its shareholding percentage up to 30% in the next three  years’ time after the  initial setup, depending on its financial condition,” CAB Cakaran said. CAB, the largest poultry company in the peninsula’s northern region, currently has 10 breeder farms and 140 broiler farms throughout Peninsular Malaysia. It produces 4.2 million broiler birds per month currently, 20% higher than the 3.5 million birds produced monthly in 2014.


Agriculture and fisheries ready for TPP, economist says

Agriculture and fisheries products will be Indonesia’s best placed goods when it comes to competing in the Trans Pacific Partnership (TPP), an economist has predicted, presuming Indonesia joins the partnership in 2018, unprepared though it is.

The Institute for the Development of Economics and Finance (Indef) acknowledged that the pact would broaden Indonesia’s export market. However, they argued that a bigger market would mean a disaster if the country was unable to provide more competitive products. “Actually, the TPP is a concept that presumes a trade barrier needs to be taken out,” Indef’s executive director Enny Sri Hartati said as quoted

Enny believes that without a strong economy and business climate, the TPP’s effect could be counterproductive as Indonesia’s goods will become pricier and less competitive. If that happened, then Indonesia would see a massive flow of imports amid stagnant exports, she added.

Enny said that agriculture and fisheries products were likely to be the best prepared commodities for joining the TPP. As for other sectors, better interdepartmental coordination was badly needed, she said, to improve the country’s competitiveness and production quality. “Yes, it is the Trade Ministry’s duty to abolish some trade barriers. But after that, the question they need to answer is what goods will they sell?” she asked.

Trade Minister Thomas Lembong highlighted two reasons for Indonesia to join the TPP. First, the TPP could be the only way for Indonesia to progress. Second, Indonesia was already advanced and prepared enough to ratify the agreement.

The ministry has been reviewing the TPP draft, comprising 6,000 pages. The pact would be inked within two years, the minister said. “We will be ready for the TPP in three years, a year after [signing our trade deal] with the European Union.


Jakarta to build modern poultry slaughterhouses

The Jakarta city administration has plans to concentrate poultry slaughtering to just a few locations, including some near the city’s low-cost apartments.

Jakarta governor Basuki “Ahok” Tjahaja Purnama said that the plan to develop slaughterhouses, which would be equipped with modern technology, was part of an effort to increase the hygiene standards of chicken meat distributed in the city. “At modern slaughterhouses, operators take three minutes to drip the fowl’s blood and they directly throw the fowl to the hot water as it bleeds,” Ahok said as quoted by the Jakarta Post.

According to Jakarta Fisheries, Agriculture and Food Security Agency head Darjamuni Taseda, the plan to establish major poultry slaughterhouses is to make it easier for the agency’s employees to control the quality of chicken meat being distributed to markets. He said that the integrated slaughterhouses would be built in five municipalities in Jakarta, starting next year. “We have a one hectare slaughterhouse as our pilot project in Rawa Terate, East Jakarta,” Darjamuni said.

To build the integrated slaughterhouses, the agency is cooperating with the Jakarta Housing and Government Building Agency in the design of both the integrated slaughterhouses and low-cost apartments, Darjamuni said.

There are about one million of chickens slaughtered every day in Jakarta, and currently nine different fowl slaughterhouses.


Jakarta signals more open cattle policy

            Indonesia’s agriculture minister isn’t ready to reveal how many Australian cattle he wants next year, but has announced a policy shift away from self-sufficiency. Indonesian media reports early last month suggested the ministry would move from quarterly to annual permits and was eyeing up to 700,000 head in 2016.

Amran Sulaiman said the numbers were still under discussion. But he wants to overhaul Indonesia’s policy on beef, saying he will change the decades-old market structure “starting now”. This is not about self sufficiency, it’s about increasing productivity,” he told reporters in Jakarta as reported by The Australian News. “But if we reach self-sufficiency, then thanks to God. Increased productivity is in line with self sufficiency however, but that’s political language. We are professional, practical.”

Amran Sulaiman said he’s still aiming for self sufficiency in rice, corn and soybeans. The new aim for beef is “productivity”, he stressed. “If we bring in (import) cattle for breeding, it’s like we’re purchasing a factory,” he said. “This is what we’re buying. A cattle factory, to increase the population. The imported stock could be fattened to 700kg within two years, he said. The minister is targeting a market beef price of Rp75,000 per kilo ($7.50). It is now about Rp100,000-120,000/kg.

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