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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Indonesia to Initiate Production Cuts to Stabilize Pr

09/10/2019

Year to date retail price of chicken meat have fallen from $1.25 per pound to $0.90 per pound resulting in losses for the major producers, PT Malindo, PT Charoen Pokphand and PT Japfa Comfeed.

 

The Director General of Livestock and Animal Health has advocated destruction of 10 million fertile eggs or making them available for human consumption through September 20th.  The program has the support of the Indonesian Poultry Breeding Association representing 45 multipliers including the major hatcheries.

 

Although the reduction, which of course would be illegal in the U.S. since it involves collusion, albeit with government approval, would only have a temporary effect. A more practical alternative will be to deplete older breeder flocks since in this way both variable costs including feed, labor and power would be eliminated.

Disposal of 10 million eggs over three weeks would represent less than half a growing cycle and might have a temporary effect in stimulating sales but would have limited impact on company profitability since there is obviously over-production due to injudicious expansion of breeder flocks. 

 

The broiler production system in Indonesia is fragmented and lacks integration.  Although three companies dominate processing the population now approaching 245 million is spread over a wide archipelago. This creates pockets of regional over-supply with markets supplied by both processed and live birds. The situation is complicated by the large number of independent growers operating with and without contracts from feed mills, hatcheries and processing plants.


 
Copyright 2019 Simon M. Shane