Indonesia: Poultry crisis causes feed market turbulence

The decline in Indonesia's poultry population has had a profound impact on market demand for feed additives, a local supplier told news outlet Asian Agribiz. Poultry feed sales also fell sharply in the first quarter of 2024 , falling nearly 30%.

The poultry industry is facing a "perfect storm" of oversupply and rising costs that is pushing many plants dangerously close to breakeven, a source said. He also explained that laying hen farmers resort to early culling as a desperate measure to avoid the burden of additional costs.

The situation is not expected to improve until at least the second half of the year, the source said, citing a recent study by the Indonesian Poultry Association showing a surplus of day-old chicks of about 576 million birds.

The oversupply is primarily due to lower demand in the egg market. Musbar Mesdi, chairman of the National Layer Breeders' Association, warned of the discrepancy between the rising operating costs farmers have to bear and the state of the public's purchasing power.

Mesdi said the main factor hurting business is the price of corn, which ranges from 8,000 to 8,400 rupees ($0.5 to $0.52 ) per kg. After all, Mesdi said, the ongoing crisis in the feed industry is a consequence of El Niño, and corn prices clearly indicate that government efforts to combat this climate phenomenon have essentially failed.

Indonesian poultry farmers have faced soaring feed prices since early 2024 as the country's drought significantly reduced production of corn, a key ingredient in poultry feed.

Desianto Budi Utomo, general chairman of the United Animal Feed Companies Association, said soaring feed prices have forced feed producers to switch from corn to wheat, which the country mainly imports from the Black Sea region and Australia.

In 2023, corn's share of animal feed production fell to 38.3% from 45.7% from the previous year, the Animal Feed Industry Association reports. This trend is likely to continue into the first quarter of 2024.

Poultry accounts for 65% of the average Indonesian consumer's poultry animal protein consumption. For a country with a population of 275 million, this means that the country needs 16 million tons of corn per year to meet domestic demand. Utomo warned that some long-standing problems, such as a shortage of high-quality seeds and problems with mechanization of the agricultural industry, will continue to hamper operations.