Indonesia's corn import ban to benefit U.S., Thai producers

Indonesia's corn import ban to benefit U.S., Thai producers

SINGAPORE (Dow Jones): U.S. corn producers are expected to carve a bigger market share in Indonesia's corn market following the country's ban on imports from Argentina and China, industry participants said.

Even Thai corn producers, who are expected to export their surplus corn this year, may get a slice of the pie as well, they said.

Indonesia imports a high level of corn every year. The U.S. Department of Agriculture, citing figures from the Indonesian Central Bureau of Statistics, said Indonesia imported 908,000 metric tons of corn in the 1999-2000 marketing year, which ran October through September.

Of the total, 700,000 tons came from China, 177,000 tons from the U.S. and 31,000 tons from Argentina. "It (ban) will be helpful in increasing the U.S. corn market share in Indonesia," said Kent Sisson, U.S. agricultural attache in Indonesia.

The Indonesian Agriculture Ministry banned imports of feed grains from several European and South American countries April 20. It has also regulated the importation of Chinese corn, allowing only the entry of processed Chinese corn.

The ban was to protect Indonesia's status of a foot-and-mouth disease-free country.

Indonesia imports a massive amount of corn because its local corn harvest can't meet the needs of the growing poultry sector.

The Indonesian Trade Ministry said the livestock industry consumed 2.5 million tons of corn in 2000, half of which were imported.

Achmad Dawami, vice-president of the Indonesian Poultry Breeders Association, said the local poultry industry is expected to produce 800 million heads of broiler chickens this year, up 23 percent from last year's 650 million heads.

"(Because of this ban), Indonesia either has to buy feed corn from alternative sources or it has to import poultry meat," said Walter Armbruster, chairman of the Singapore-based Pacific Economic Cooperation Council.

Chicken meat is the most popular meat product in Indonesia. Nasi ayam (fried rice with chicken meat) and ayam bakar (spicy roast chicken) are part of Indonesians' typical diet.

Importing chicken meat, however, is out of the question, said Dawami. Local poultry breeders can satisfy the domestic demand for chicken meat, if they can get ample U.S. feed corn.

Jakarta-based traders and feed millers said they have dropped Argentina from their list of sellers and are now switching to U.S. corn.

They said that aside from its good quality, U.S. corn, which is selling at around $115 a ton, C&F, Jakarta, is price- competitive.

"Most feed mills are now starting to change their corn import sources," said Budiarto Soebijanto, chairman of the Indonesian Feed Mill Association.

"Indonesia has been a good customer of U.S. feed grains in the past. This (ban) will allow Indonesia to purchase more U.S. feed grains," said Cary Siffereth, director for South East Asia of the U.S. Feed Grains Council.

The ban has also created a golden opportunity for Thai producers.

Thailand isn't a regular corn exporter as its domestic production is just enough to fill local requirements.

But according to Karoon Tantiponganant, deputy manager of Nanapan Co., one of the major agricultural export firms in Bangkok, Thailand will have a surplus this year thus allowing it to sell corn to Indonesia.

Traders said Indonesia recently bought 75,000 tons of feed corn from Thailand, and the shipment is due in the next two months.