2008-2009 DATA CONSULT. All rights reserved.


August 2009



The country’s poultry farming industry has gone through the global crisis relatively unscathed. The animal husbandry industry  performed well in 2008 when the crisis began to hit  In 2009, when the purchasing power of the people is still weak as a result of the economic slow down, the poultry farming industry continues to expand. Chicken  and chicken egg production  continue to increase providing cheaper source of protein   in the country . 

The country’s production  broiler DOC (Daily Old Chick) surged to 1.2 million in 2008 from 1.1 million in the previous year. Increase was also recorded in the production egg layer DOC – from 64 million  in 2007 to 68 million  in 2008.  

The increase in production, however, brought on a problem. The domestic market was oversupplied by 27% in mid 2009, up from only 5% in 2008 causing a price fall  on the domestic market. 

Meanwhile,  the prices of chicken feed rose resulting in an increase in production cost and selling price of live chicken when the purchasing power of the general consumers has not significantly improved. 

Description of product 

Generally chicken farms  consist of those raising :
1.        Non pure bred chickens  or free range chickens, which are raised traditionally by small farmers. 
2.        Pure bred chickens, which were originally imported into the country including broilers and egg layers. 

Imported Day Old Chick (DOC)  in the form of DOC of Final Stock (FS DOCS). Final Stock chickens are  raised only in one production cycle  not for breeding 

Broiler DOCs will be ready for slaughtering in 8 weeks  and layer DOC will take 73 week to be ready  for breeding.  

Commercial pure bred chickens are the product of animal breeding technology either through cross breeding of a number of different lines (pure bred lines) Chickens of this type have higher productivity, more resistant to diseases. and other superior qualities. 

The rapid expansion of poultry breeding industry has created new related lines of  business such as breeding farms, hatchery, slaughterhouse operation, egg trading, poultry feed industry, animal medicine industry, etc. 

Chicken farm could be classified into four categories – small farms with  less than  40,000 chickens, small medium farms with 100,000-300,000 chickens, medium farms with 500,000 -1 million chickens and large farms with more than one million chickens each. 

Production capacity  and producers 

Based data at the Indonesian Association of  Poultry Farm Companies (GAPPI), Indonesia has 40 chicken farm companies including 16 categorized as large companies. 

The country’s total installed capacity is 40 million  Daily Old Chickens (DOC) per week or 2,080 million per year.  However, currently  production is only 26 million per week  - or a capacity utilization of 65%. 

Chicken farm business producing broilers and DOCs are dominated by large companies using modern technology. Most companies operating in commercial chicken farming industry are foreign investment (PMA) companies  dominating 70%-80% of the domestic market. Among the largest companies are the Thailand based  Charoen Popkhand, Korea’s CJ Feed Jombang, and Malaysia’s  Sierad. 

Integrated Animal Husbandry  Industry 

Business in animal husbandry industry is still dominated by foreign investment companies  such as Charoen Pokphand, Japfa Comfeed, Sierad Produce  and CJ Feed. They integrate animal husbandry industry with animal feed industry and industry processing animal husbandry products.. 

PT. Charoen Pokphand is one of the largest operator of chicken farms . In addition to chcken farms it  has chicken feed factories  and  shrimp feed plants, and chicken meat processing factories producing sausage  kwon with the brand of Prima Food.

PT. Japfa Comfeed also has poultry feed factories , chicken farms,  and chicken meat processing factories  producing sausage with the brand of So Good.

Small livestock farms as partners 

Small livestock farms  which are much larger in number are facing threat from expanding large  companies. They have lost domination of the market  as they are behind in technology and capital    

A number of large companies like Sierad Produce, Charoen Pokphand Indonesia,  and Japfa Comfeed Indonesia have  established cooperation with small farmers  by providing the farmers with fund  to start business in livestock farming, and supplying them  with maintenance and production facilities including DOC, feed, medicines.   and  vitamins. The companies are involved only by helping the farmers to keep the DOCs healthy   and grow to be ready for  harvest as scheduled. 

The companies generally promise incentives for properly observing the food conversion ratio (FCR) the standards set by the companies. The incentives is in the form of  extra income  added  to  the original contract.  

The partnership system  adopted by the CP Group   developed since 1987 is more in  the contract price.  Plasma farmers having contract with the CP Group are required to have at least 5,000 chickens  each .  Currently CP cooperate with thousands of plasma farmers in Sumatra, Java, Kalimantan, Sulawesi,  and  NTB.

PT Wonokoyo adopts a partnership system almost the same as used by CP but a farmer is required only to have at least 1,000 chickens. The company has  developed the partnership system since 1999 in Java especially East Java. 

The plasma farmers of CJ Feed  are required to have 4,000 chickens each. It has  developed plasma farms in Banten  and West Java. 

Meanwhile, Sierad Produce  has developed partnership with around 1,000 small farmers  in West Java,  Central Java,  and  East Java.  It produces 1.5 million DOCs a week  and 900,000 of which are for its plasma farmers  and the rest are sent to the market to be sold to independent chicken farmers. Sierad plans to expand its partnership system, therefore, it will increase its DOC production. Currently its DOC production facilities are  operating at 55% of their  capacity. Recently Sierad secured a loan of Rp225 billion from  Bank BNI to finance its business expansion. 

Production of broilers and egg layers up

Based on data from the animal husbandry directorate general, the country’s production of broilers  in the period of 2004-2008  increased from year to year. The production  depends much on supplies of FS DOCS  from the DOC producers. 

In the first quarter of 2008, the country’s production of broiler FS DOCs  rose to 16.5%  to 26.8 million per week from  23 DOCs per week in he same period  in the previous year.  

Meanwhile, the country’s production of  broiler FS DOCs   in the second quarter of 2009 rose to 28.2 million DOCs per week  from 24.1 million per week in the same period in 2008. 

The production  of broilers  grew 5.89% from  975 million  in 2004 to 1,230 million in 2008. 

The country’s  production pure bred  layer FS DOCs  in the first quarter of 2008  fell 4.1% to  0.7 million per week  from 0.73 million per week in the same period in 2007.  The production pure bred layer FS DOCs rose to 1.55 million DOCs per week in the second quarter of 2009 from the same period in 2008. 

In the second quarter of 2009, imports of layer parent stock (PS) totaled 51,660 chickens. In the same period in 2008, there was no import of layer PS chickens. Increase in supply of layer PS on strong demand ahead of Idul Fitri. 

The country’s production of layer chickens also increased in the 2004 - 2008 period growing  5.47% a year on the average. The production  of egg layers rose from 55 million  in  2004  to 68 million in 2008.   

Chicken farms in  West Java the largest 

Related Topics

ICN - August  2009



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