GSM program spurs U.S. soy sales to Indonesia

GSM program spurs U.S. soy sales to Indonesia

SINGAPORE (Reuters): U.S. credit guarantees and growing demand from Indonesia's poultry industry will help U.S. soy sales there in 2000/2001 (Oct-Sept) surpass last year levels, an American Soybean Association (ASA) official said on Monday.

"We are expecting exports of U.S. soybeans and soymeal to Indonesia to show a steady growth this year," said John Lindblom, ASA's regional director for Southeast Asia. "Sales to Indonesia under the GSM program are going on very well."

U.S. farm export credit guarantees -- known as the GSM program -- underwrite credit from private U.S. banks to approved foreign banks to finance U.S. agricultural sales.

Last year, the U.S. Agriculture Department raised Indonesia's allocation under the credit guarantee program to $500 million for 2000/2001 after the $400 million allocation for the previous year was completely used up.

"By now, probably $300 million of the $500 million allocation has been used," Lindblom told Reuters in a telephone interview. "The bulk of that has been used for buying soy products -- both soybeans and soymeal."

Indonesia had been a strong traditional buyer of soymeal from India because of freight advantage but U.S. credit guarantees had prompted a rise in purchases from the United States in the past two years.

Indonesia's soymeal imports in calendar 2000 were more than one million tons, with the U.S. increasing its share to 250,000 tons from just 10,000 tons the year before.

"In 2001, we expect that U.S. soymeal sales to Indonesia would be somewhere between 350,000 and 400,000 tons," Lindblom said, adding that their soybean exports to Indonesia in 2001 were also likely to surpass last year's level of one million tons.

Lindblom said he expected the whole allocation of $500 million to be used up.

"Out of the remaining $200 million credit, I would expect some $100 million would probably go for more soybean and soymeal imports," he said.

Lindblom, who visited Indonesia last month, said the local compound feed industry was doing well despite the political and economic problems.

"I don't see any big impact of the current political and other problems in Indonesia on its feed industry," he said.

Earlier this month, Indonesian traders said a weak rupiah and uncertainty surrounding Indonesia's political turmoil had put the brake on grain imports into the country.

"Despite the problems, we hope that Indonesia's commercial feed production will be about 5.1 million tons in 2001," Lindblom said. "We stick to that earlier projection."

Indonesia's commercial feed output dropped to 3.7 million tons in 1999 from as high as 6.5 million before the start of the regional economic crisis struck in mid-1997.

But it witnessed a rebound to 4.6 million tons in 2000 due to strong demand from its poultry sector, which accounts for the bulk of the country's feed production. Imported feed ingredients account for 50 to 60 percent of the formulation of animal feed.

"Brolier production is slowly coming close to where it was before the start of the economic crisis," Lindblom said. "The industry is firmly coming back on track."

Indonesia's annual per capita consumption of poultry fell to 1.73 kg in 1998 from 3.2 kg in 1997 and 3.7 kg in 1996. Broiler output had dropped to four million a week in 1998 from about 16 million in the previous year.