Thu, 04 Mar 1999

Charoen Pokphand cuts feedmeal output

JAKARTA (JP): Publicly listed poultry feed meal producer PT Charoen Pokphand Indonesia said on Wednesday that the country's worst ever economic crisis has forced the company to reduce production by 50 percent.

Company Director Djoko M. Basoeki said feed meal production is currently around 1.2 million metric tons a year, down from last year's production of 2.41 million tons.

"Lower demand and the soaring cost of raw materials have forced us to cut our production by 50 percent," he said during a hearing with the House of Representatives Commission III on agriculture and food affairs.

He said the monetary turmoil, which has slashed the rupiah's value by about 75 percent since July, 1997, has more than doubled the price of feed meal as most of the raw materials are imported.

The demand has dropped sharply because many poultry farmers can no longer afford to buy feed meal, he said.

According to the ministry of agriculture, the skyrocketing prices of feed meal have forced at least 80 percent of the country's 17,600 poultry farmers out of business.

Djoko said his company holds a 38 percent share of the country's poultry feed meal market.

The company operates five plants in Jakarta, West Java, East Java and Medan in North Sumatra.

Djoko said the company's poultry breeder subsidiary PT Charoen Pokphand Jaya Farm (CPJF), has also reduced its production by 50 percent because of the lower demand.

He said that CPJF produced only 125 million day-old chicks (DOC) in 1998, halving its normal annual production capacity of 250 million DOC.

Charoen Pokphand currently holds an 80 percent stake in CPJF.

To compensate the lower domestic demand, Djoko said, CPJF exported its DOC to Singapore and Malaysia in 1998, with the help of the marketing network of the Charoen Pokphand Group of Thailand.

Djoko said the company also opened a chicken slaughtering and processing plant in Serang, West Java in early 1998, in a bid to diversify its business.

The slaughter house, which has a production capacity of 4,000 frozen chickens per hour, exports its products to the Middle East, Japan and Singapore, generating US$3.4 million in 1998. (gis)