Indo import policies hit chicken

Reuters reports that inconsistent live cattle import policies will mean the culling of six million chickens across the archipelago.

The sudden cut to cattle import permits made in the third quarter of 2015 drove up beef prices, pushing Indonesian consumers towards chicken. Chicken prices rose to 20,250 rupiah per kilogram ($1.96/kg), 15 per cent higher than the first half average.

“The spike came despite the fact that output was already outstripping demand by up to 30 per cent,” Reuters reported.

“Prices have come down now with live birds on farms selling at about 12-18 per cent below production costs.”

Srie Agustina, director general of domestic trade, told the agency that because of the oversupply, “There must be a management, a control”.

Political manipulation of markets in the name of self sufficiency has apparently driven many smaller chicken producers to the wall.

The government’s self-sufficiency agenda has had consequences on other industries, Reuters reports.

“A reluctance to import rice has made Indonesian wholesale prices among the most expensive in the region this year, while delays in issuing raw sugar import permits caused local refineries to close.”

The government has also stopped handing out corn import permits to private operators, and is only allowing the government logistics agency BULOG to bring in corn.

Desianto Budi Utomo, secretary general of the Indonesian Feedmills Association, told Reuters the inefficiency of the government-controlled food import system was creating a high-cost environment that was damaging the competitiveness of Indonesian companies.

Indonesia threw the Australian live export industry into disarray in the third quarter, when it only issued permits for the import of 50,000 cattle instead of the 200,000 that supply chain analysis indicated would be needed.

As beef prices climbed, prompting protests from wet market meat retailers, the government attempted to counter the shortfall by charging BULOG with sourcing another 50,000 head. The agency had reportedly only shipped 7000 head by the end of the quarter.

Last week, Indonesia issued permits for the import of 200,000 head of Australian cattle in the fourth quarter.

However, there appears to be a strong likelihood that Indonesia will not be able to charge its beef supply chain sufficiently to meet the peak demand of the Ramadan season in 2016.