Jakarta block on corn imports to hike poultry prices: trade group

Jakarta

INDONESIA'S recent move to block imports of corn for feed mills will cause wholesale poultry and egg prices to rise at least 6 per cent over the next month, the Indonesian Poultry Farmers Association said on Tuesday.

The country, which imports corn mainly from Argentina and Brazil, stopped issuing import permits for corn used in feed mills in July as it made a broader push for food self sufficiency.

Corn demand in South-east Asia's largest economy has grown in recent years amid rising wealth and higher poultry demand, and critics warn curbing imports could stoke concerns about inflation, which was at a higher-than-expected 7.6 per cent in July.

Association chairman Hartono said: "This policy has good intentions, but it was too sudden, without any preparation. This three million tonnes of corn per year can provide jobs for so many people here," referring to the volume that had been slated for import this year.

Corn traders had pushed up prices of the grain sold locally to breeders by 10 per cent after news on import curbs, he said. "Brokers are the ones who benefit from this situation."

According to the Indonesian Feedmill Association, the country was expected to import around 430,000 tonnes of corn from July to August. Shipments are now being held up at ports, including in North Sumatra, Banten and East Java, it said.

The government has allowed feed mills to receive corn shipments that arrived in Indonesia in July and early August on condition the state logistics agency supervises the process from unloading to distribution, Desianto Budi Utomo, its secretary general said.

However, no decision has been made on contracts beyond this month, he said. "We can't declare default yet for September and October shipments."

Animal feed prices will increase as mills substitute corn with other grains such as wheat and palm kernel, which are more expensive and need additional enzymes to process, he added. Poultry prices will, as a result, go up.

Poultry rates are currently at around 22,000 rupiah (S$2.25) per kg, said Mr Hartono. There is room for gains given an expected growth in demand.

Indonesia has signed a deal to resume poultry exports to Japan after a decade's hiatus, while global commodities giants, including Cargill Inc and Indofood Sukses Makmur, have plans to invest in Indonesia's poultry sector. Reuters