According to Simatupang and Pakpahan (nd), there was no animal feed manufacturing industry in Indonesia until the end of the 1960s. Beginning in the 1970s, plants began to be built to cater for the needs of the poultry industry. In their examination of the industry, PT Ekamasni Consulting (1995) divided the animal feed industry into the animal feed components industry and the animal feed industry. Firms in the animal feed components industry produce a semi finished raw material that has to be further processed or mixed with other raw materials to be used as an animal feed. Animal feed components cover maize, oil cake from soybean, fish meal and cassava. The animal feed industry uses the outputs from the components industry to produce compound feed and concentrates. The division used by PT Ekamasni Consulting will be followed to a large degree in this part of the report.
Raw materials used in the Indonesian industry
The main raw materials used in the animal feed industry are listed in Table 58. According to PT Data Consult Inc. (1995), the crucial problem for the industry is the high cost of raw materials. Soybeans are an important import commodity for Indonesia. Most of the soybean grain is used for human consumption whereas soybean oil cake - a by product of the oil processing industry - is used as an animal feed. Soybean imports are controlled by BULOG, while soybean meal was deregulated by the government in 1996, allowing for duty free imports. Maize (corn) has experienced a rapid increase in demand that has outpaced production. As a result, Indonesia is a net corn importer. Indonesia is attempting to increase domestic production through the use of new hybrid varieties. In 1996-97, approximately 515000 ha will be sown to new varieties. Feed producing companies are permitted to import corn free of duty. The cost of producing animal feed should decline from 1998 or 1999 when new port facilities will enable larger ships to carry grain imports. Cargill has signed agreements with Indonesian companies to improve port facilities, a development expected to save between US$8 to US$10/t. It needs to be noted that industrial residues play an important role in the animal feed industry. Similarly rice straw (for ruminants) and rice bran (for pigs and poultry) play important roles, particularly for small holders. Manurung (1990) pointed out that crop residue and by products used for feed represented only about 15% of total crop residues available.
Table 58. Raw materials used in the animal feed industry, Indonesia
|
Seeds |
Maize, sorghum |
|
Vegetable proteins |
Soybean oil cake, oil cake nuts, canola, corn gluten meal,
rape seed meal |
|
Animal protein |
Fish meal, meat bone meal |
|
General feed I |
Rice bran, pollard, oil cake coconut, sesbana leaf flour, st.e
seed, st.e flour |
|
General feed II |
Skim milk powder, fish oil, palm oil, sugar cane, salt, premix
alimet, choline chloride |
Source: PT Ekamasni Consulting (1995)The animal feed component industry
In 1994 there were 112 animal feed component mills with a total production capacity of 4.8 Mt. per year. Most of these mills are in Java (Table 59). Their concentration on Java is not surprising since this is where the majority of Indonesians live and where the livestock industry - particularly the poultry industry - is concentrated.
Table 59. Animal feed component mills and production capacity, 1994
|
Province |
Number of mills |
Production capacity |
|
DI Aceh |
1 |
33600 |
|
Northern Sumatera |
6 |
454300 |
|
Riau |
2 |
98400 |
|
Jambi |
1 |
15000 |
|
Southern Sumatera |
4 |
152880 |
|
Bengkuku |
1 |
90000 |
|
Lampung |
20 |
1216580 |
|
Sumatera |
35 |
2060580 |
|
DKI Jakarta |
3 |
252603 |
|
West Java |
13 |
319261 |
|
Central Java |
15 |
544721 |
|
East Java |
31 |
1216180 |
|
Java |
62 |
2332765 |
|
Bali |
2 |
2720 |
|
West Kalimantan |
2 |
108000 |
|
East Kalimantan |
1 |
42000 |
|
Kalimantan |
3 |
150000 |
|
North Sulawesi |
4 |
685000 |
|
South Sulawesi |
6 |
151100 |
|
Sulawesi |
10 |
219600 |
|
Indonesia |
112 |
4765665 |
Source: PT Ekamasni Consulting (1995)The largest producer of animal feed components is PT Japfa Comfeed Indonesia. The company was started in 1971 as PT Java Pelletizing Factory Ltd in a joint venture with the German company Internationale Graanhandel Teghrau. All of the production from this company was exported. In 1982 the firm was taken over by PT Ometraco and its status was changed to the domestic investment scheme. 1989 saw the company going public and changing its name to PT Japfa Comfeed Indonesia after merger with PT Comfeed Indonesia. With the proceeds from going public, Japfa Comfeed acquired shrimp and chicken breeding companies. By 1995, it had become the “leading and most integrated company in agribusiness in Indonesia” (PT Data Consult Inc., 1995, p13). The capacity of the company is around 470000 t. per year. Table 60 lists the major firms and their location.
Table 60. Major animal feed producers, Indonesia
|
Company
|
Location
|
Production capacity |
|
(t/year) |
||
|
PT Japfa Comfeed Indonesia |
Surabaya |
470000 |
|
PT Sprained Soybean Industry |
Jakarta |
244000 |
|
PT Miter Megan Cattle Feed |
Median |
160000 |
|
PT Suryadarma Cattle Feed |
Deli |
160000 |
|
PT Lampung Sumber Kencana P.F. |
Lampung |
150000 |
|
PT Inti Tapioka |
Lampung |
150000 |
|
PT Lampung Pelletizing Factory |
Lampung |
140000 |
|
PT Teluk Intan |
Lampung |
100000 |
Source: PT Ekamasni Consulting (1995)Between 1989 and 1993, production of the animal feed component industry increased by about 9.6% to cater for growth in the poultry industry. In 1993 production was about 2.8 Mt., or about 57.9% of capacity (Table 61). Low levels of capacity utilization seems to be a feature of the feed industry. Simatupang and Pakpahan (nd) say that the protection of the feed industry and the policy of import substitution has resulted in an excessively large and highly capital intensive industry. They reported that in 1987, capacity utilization was only 18%.
The Indonesian poultry industry (as will be seen later, it is by far the major market for animal feed) has been facing competition from imported poultry meat. For small producers, operating with slim profit margins, the competition faced by the domestic poultry industry has reduced their marketing opportunities (PT Data Consult Inc. 1995).
Table 61. Production of animal feed components
|
Year
|
Production |
|
(Mt/year) |
|
|
1989 |
2.0 |
|
1990 |
2.6 |
|
1991 |
2.6 |
|
1992 |
2.9 |
|
1993 |
2.8 |
Source: PT Ekamasni Consulting (1995)There has been a high level of investment in the animal feed component industry. Between 1992 and 1994 (January to September), 18 new projects received permits from the Investment Coordinating Board. Of the 18 projects, 12 were new and six were for expanding existing plants. All of the new plants planned are for the fishmeal industry. Details of the applications are presented in Table 62 along with projected production of the industry to 2000.
Table 62. Projected capacity of the animal feed component industry
|
Year
|
Increase in capacity
|
Projected capacity |
|
(t/year) |
||
|
1992 |
Nine new project planned to come into production in 1995 and 1 expansion
of an existing plant |
|
|
1993 |
Three new projects scheduled to begin in 1995 or 1996. The capacity of
these new plants is 111200 t/year. |
|
|
1994 |
Three new plants and 2 plant expansions will increase capacity by 130550
t/year |
4765665 |
|
1995 |
|
5007456 |
|
1996 |
|
5304156 |
|
1997 |
|
5370206 |
|
1998 |
|
5379206 |
|
1999 |
|
5379206 |
|
2000 |
|
5379206 |
Source: PT Ekamasni Consulting (1995)Animal feed mills
Indonesia has 158 feed mills with a capacity of 5.5 m.t. per year. Not surprisingly, in light of the fact that most of the population and poultry industry are located on Java island, the feed mills are also concentrated on Java. Table 63 contains information on the production capacity of Indonesia’s feed mills.
Table 63. Production capacity of feed mills
|
Province
|
Number of mills
|
Production capacity |
|
(t/year) |
||
|
DIAceh |
2 |
9360 |
|
Northern Sumatera |
29 |
646386 |
|
Western Sumatera |
1 |
220 |
|
Riau |
3 |
24920 |
|
Jambi |
1 |
48 |
|
South Sumatera |
3 |
11600 |
|
Bengkuku |
1 |
3600 |
|
Lampung |
7 |
194800 |
|
Sumatera |
47 |
890934 |
|
DKI Jakarta |
9 |
484100 |
|
West Java |
48 |
2004835 |
|
DI Yogjakarta |
2 |
36250 |
|
Central Java |
5 |
262600 |
|
East Java |
21 |
1567350 |
|
Java |
90 |
4355135 |
|
Bali |
6 |
4943 |
|
West Kalimantan |
2 |
78000 |
|
East Kalimantan |
1 |
15000 |
|
Kalimantan |
3 |
93000 |
|
West Sulawesi |
2 |
53760 |
|
South Sulawesi |
8 |
131800 |
|
South East Sulawesi |
1 |
900 |
|
Sulawesi |
12 |
186460 |
|
Indonesia |
158 |
5530472 |
Source: PT Ekamasni Consulting (1995)Fourteen of the animal feed producers are integrated with the producers of animal feed components. The feed producing industry is very concentrated, with the production capacity of the largest firm (PT Charoen Pokphand Indonesia) accounting for almost 20 per cent of the capacity of the entire industry (Table 64).
Table 64. Major companies in the animal feed mill industry and their production capacity, 1994
|
Company
|
Type of venture
|
Location of feedmills
|
Production capacity |
|
(t/year) |
|||
|
PT Charoen Pokphand Indonesia |
Foreign investment scheme |
Medan, Jakarta, Surabaya, Tangerang |
1000000 |
|
PT Japfa Comfeed Indonesia |
Domestic investment scheme |
Tangerang, Cirebon, Sidoarjo, Medan, Lampung |
650000 |
|
PT Cargill Indonesia |
Foreign investment scheme |
Bogor, Semarang, Surabaya, Ujung Pandang |
220000 |
|
PT Buana Superior Feedmill |
Domestic investment scheme |
Bekasi |
201600 |
|
PT Gold Coin Indonesia |
Foreign investment scheme |
Bekasi, Medan, Surabaya |
200000 |
|
PT Bulan Tatapurna Feedmill |
Domestic investment scheme |
Tangarang |
200000 |
Source: PT Ekamasni Consulting (1995)The majority (55%) of the feed mills are small operations, with annual capacity of less than 10000 t/year. This may be seen from Table 65. Not all of the smaller plants operate every day.
Table 65. Distribution of feed mills by capacity, 1994
|
Production capacity |
Number
|
Percentagea
|
|
(t/year) |
||
|
over 200000 |
6 |
3.8 |
|
100000 to 200000 |
7 |
4.4 |
|
50000 to 100000 |
10 |
6.3 |
|
25000 to 50000 |
17 |
10.7 |
|
10000 to 25000 |
31 |
19.6 |
|
under 10000 |
87 |
55.1 |
|
Total |
158 |
100.0 |
Note: a column may not sum to 100 due to roundingThe total production of animal feed in 1993 was 2383673 t. or about 45% of capacity. A 1993 survey found that of the 142 companies in animal feed production, only 68 operated continuously. The 1993 production was about 600000 t. above the 1989 level (Table 65). Of the 1993 production, 87.5% was used for the poultry industry, 10% for shrimp and fish, and 2.5% for cattle, pigs, sheep and other four legged animals.Source: PT Ekamasni Consulting (1995)
Table 66. Production of animal feed
|
Year
|
Production |
|
(t) |
|
|
1989 |
1721020 |
|
1990 |
1855259 |
|
1991 |
1911091 |
|
1992 |
2122414 |
|
1993 |
2383673 |
Source: PT Ekamasni Consulting (1995)According to PT Ekamasni Consulting (1995), competition in the industry is tight, with the largest three companies in 1993 producing 39% of total production (Table 67).
Table 67. Major companies in the Indonesia feed industry, 1993
|
Company
|
Production |
Share |
|
(000t.) |
(%) |
|
|
PT Charoen Pokphand Indonesia |
730 |
30.6 |
|
PT Central Proteinaprima |
161 |
6.8 |
|
PT Central Pangan Pertiwi |
40 |
1.7 |
|
PT Anwar Sierad |
50 |
2.1 |
|
Others |
1403 |
58.8 |
|
Total |
2384 |
100.0 |
Source: PT Ekamasni Consulting (1995)As was the case for the animal feed component industry, a number of expansion plans have been made. These are shown in Table 68.
Table 68. New and expanded production facilities, Indonesia
|
Year |
Type of project |
Number of projects |
Comment |
|
1992
|
New |
5 |
These projects were due for completion in |
|
Expansions |
4 |
1995 and 1996. Capacity will expand by 527400 t. The projects were scheduled
to be completed in 1995 and 1996. One was for shrimp and the others for
animals. |
|
|
1993
|
New |
3 |
These projects were planned for |
|
Expansions |
2 |
completion in 1996 and 1997. They will add 395200 t to production capacity.
Projects are divided equally between animals and shrimp. |
|
|
1994
|
New |
5 |
Cattle feed production will expand by |
|
Expansions |
11 |
487000 t. With the completion of two of the 16 plants. One poultry feed
factory will expand capacity by 180000 t. Completion of all 16 facilities
will increase production capacity by 3609500 t. The new and/or expanded
plants will be operating by 1997. |
Source: PT Ekamasni Consulting (1995)With the new and expanded plants, production capacity will expand to just over 10200000 t by 1997 (Table 69). Only moderate increases over this 1997 level are planned for 2000.
Table 69. Production capacity in the Indonesian animal feed industry, 1994 to 2000
|
Year
|
Production Capacity |
|
(t/year) |
|
|
1994 |
5530472 |
|
1995 |
5933872 |
|
1996 |
7720272 |
|
1997 |
10275772 |
|
1998 |
10538572 |
|
1999 |
10538572 |
|
2000 |
10538572 |
Source: PT Ekamasni Consulting (1995)The production of broilers has underpinned the expansion in the feed industry. Deregulation of the Indonesian economy in 1991 encouraged investment in poultry. Partly as a result, broiler production increased from 262.9 million birds in 1989 to 541 million birds in 1993. Table 70 shows the distribution of animal feeds between poultry, four footed animals and fisheries. Data for 1994 published by PT Data Consult Inc. (1995) tell the same story. According to their figures, poultry accounted for 86% of animal feed consumption, pigs 4.6% and other livestock the balance of 9.4%.
Table 70. Consumption of animal feeds, Indonesia
|
Year
|
Poultry |
Four footed animals |
Fisheries |
|
(kt) |
(kt) |
(kt) |
|
|
1989 |
1431.3 |
69.4 |
163.8 |
|
1990 |
1619.4 |
103.1 |
185.3 |
|
1991 |
1569.9 |
134.1 |
184.2 |
|
1992 |
1774.6 |
107.2 |
205.8 |
|
1993 |
2062.6 |
121.1 |
183.1 |
Source: PT Ekamasni Consulting (1995)Between 1989 and 1993, Indonesia was a very modest net exporter of animal feeds, as Table 71 shows
Table 71. Consumption, production and trade in animal feeds, Indonesia
|
Year
|
Production |
Imports |
Exports |
Consumption |
|
(kt) |
(kt) |
(kt) |
(kt) |
|
|
1989 |
1721.0 |
114.1 |
170.6 |
1664.5 |
|
1990 |
1855.3 |
123.2 |
70.7 |
1907.8 |
|
1991 |
1911.1 |
120.3 |
143.2 |
1888.2 |
|
1992 |
2122.4 |
76.9 |
111.7 |
1087.6 |
|
1993 |
2383.7 |
87.2 |
103.5 |
2367.4 |
Source: PT Ekamasni Consulting (1995)Animal feed is a key part of the cost structure of the animal industries. For broilers, it represents about 65% of costs. Day old chicks represent about 25% of costs, while other operating expenses make up the balance. Broiler production profitability also depends on animal feed. When the birds are being maintained, feed is 84% of costs, and this falls to 76% when the broilers are fully in production (Table 72).
Table 72. Share of animal feeds in the cost structure of the poultry industry
|
Item
|
Share |
||
|
(%) |
|||
|
Cost structure of broilers |
|
||
|
|
|
animal feed |
65 |
|
|
|
day old chicks |
25 |
|
|
|
operating costs |
10 |
|
|
|
||
|
Cost structure of layers |
|
||
|
|
|
animal feed maintenance |
84 |
|
|
|
animal feed production |
76 |
|
|
|
day old chicks |
5 |
|
|
|
operating costs |
11 to 19 |
Source: PT Ekamasni Consulting (1995)
Table 73. Projected consumption of animal feed
|
Year
|
Poultry |
Four footed |
Fisheries |
|
(kt) |
(kt) |
(kt) |
|
|
1994 |
2362.2 |
147.0 |
255.9 |
|
1995 |
2667.5 |
169.1 |
294.6 |
|
1996 |
3067.6 |
194.1 |
338.5 |
|
1997 |
3527.8 |
223.6 |
389.2 |
|
1998 |
4057.6 |
257.1 |
447.6 |
|
1999 |
4665.5 |
295.7 |
514.7 |
|
2000 |
5365.3 |
340.1 |
591.9 |
Source: PT Ekamasni Consulting (1995)
Table 74. Projected production of animal feed
|
Year
|
Existing capacity |
Expected capacity |
New capacity |
Total |
|
(kt) |
(kt) |
(kt) |
(kt) |
|
|
1994 |
2765.2 |
|
|
2765.2 |
|
1995 |
2765.2 |
143 |
18.4 |
2926.6 |
|
1996 |
2765.2 |
809.1 |
147.5 |
3721.8 |
|
1997 |
2765.2 |
1989.0 |
427.7 |
5181.9 |
|
1998 |
2765.2 |
2727.9 |
702.9 |
6195.8 |
|
1999 |
2765.2 |
3282.0 |
891.0 |
6938.2 |
|
2000 |
2765.2 |
3484.8 |
995.8 |
7245.8 |
Source: PT Ekamasni Consulting (1995)
Table 75. Projected livestock population
|
Year
|
Poultry |
Four footed animals
|
Fisheries |
|
(000) |
(kt) |
||
|
1994 |
1003247 |
43591 |
3856 |
|
1995 |
1097272 |
44732 |
4116 |
|
1996 |
1204618 |
45907 |
4272 |
|
1997 |
1328629 |
47118 |
4501 |
|
1998 |
1457476 |
48364 |
4745 |
Source: PT Ekamasni Consulting (1995)The prospects for the animal feed industry in Indonesia are, in the opinion of PT Data Consult Inc. (1995), somewhat mixed. The livestock industry - particularly the poultry industry - has a positive outlook. This should mean increased demand for feeds. However, the tightness of the market indicates that only the integrated producers such as PT Japfa Comfeed, Charoen Pokphand, Anwar Sierad and Cipendawa Farm Enterprise, will be able to survive. Whether this is still the case in light of the situation facing Indonesia in the early part of 1998 is uncertain.
