Unsold imported corn to be exported

By Sylvia Gratia M. Nirang

JAKARTA (JP): Feedmeal producers are reselling their stocks of imported corn overseas due to sluggish demand here as bankruptcies batter the country's poultry farmers.

Ismail, the manager of the trading department of major feedmeal producer JAPFA Comfeed, said yesterday that exports were expected to continue throughout the year as feedmeal producers tried to get rid of their unsold stock.

"Feedmillers are not looking for the profits. They just want to export because it takes a lot of money to keep corn in the storehouses. They are even exporting imported corn just to keep their cash flow moving in facing sharp falls in feedmeal demand," Ismail told The Jakarta Post.

He said prime areas for growing corn domestically, including Lampung, East and Central Java and South Sulawesi, would harvest the crop this month and April.

"We have a commitment to buy local corn, but we have limited consumption. To fulfill our commitment, we plan to sell our old stock of imported corns," Ismail said.

He said a bumper harvest exceeding local demands was expected this year.

Foreign buyers from Malaysia and Thailand, he added, were looking forward to buying Indonesian corn -- both the local production and the ex-imports -- due to its much lower price compared to corn from the United States.

A Malaysian corn importer was quoted by Reuters last week as saying the quantity of Indonesian corn arriving in Malaysian ports was not big but it was fetching much lower prices.

Indonesia's Association of Feedmeal Producers said early this year that the country's feedmeal production was expected to plunge by over 55 percent this year, to 2.5 million tons from 5.5 million tons in 1997. It cited rising prices, which have forced 80 percent of poultry farmers out of business, as the reason.

Data from the Ministry of Agriculture shows the country imports at least one million tons of corn on average a year, but last year the amount increased by 30 percent to 1.3 million tons, due to the prolonged dry season which destroyed the country's own harvest.

Imports came from the United States, Argentina and China.

The nation produced 9.18 million tons last year, a slight decrease by 1.34 percent from 9.31 million tons in 1996. Local demand for corn is more than 10 million tons per year. Around 40 percent of this is consumed by the feedmeal sector, but its consumption this year is expected to fall drastically to around 1.5 million tons.

Corn makes up about 50 percent of the fodder. Other ingredients are fish powder, premix concentrate, rice shiftings and soybean pellets.

The country's currency crisis, which has slashed the rupiah's value against the U.S dollar by about 75 percent since early July, has more than doubled the price of feedmeal, which mainly contains imported materials.

Skyrocketing prices have threatened most of the country's farmers and forced at least 80 percent of the country's 17,600 poultry farmers to stop operation.

A manager of a major feedmeal producer who asked for anonymity said that at least 25,000 tons of corn was exported in February, while another 40,000 tons would be shipped in the middle of March.

"Imports have stopped. Who wants to do it anyway when demand for feedmeal has dropped sharply. Besides, we can't afford imported corn anymore."

He said local feedmillers formerly preferred to use imported corn due to the high water content in local harvested corn, which made it more difficult for processing.

Outgoing Minister of Agriculture Sjarifudin Baharsjah announced last week that the government set the corn floor price at Rp 550 per kilogram to protect farmers from the sharp drop in the prices caused by the excessive local supply.

He said the country's feedmeal industry was expected to fail to absorb the local harvest this year due to the falling demand.

The corn harvest in East and Central Java, he added, was expected to reach two million tons this month, while the country's corn "barn" of Lampung was expected to harvest over 600,000 tons this month.

Antara news agency reported last week that the price of Lampung corn at the farmers level dropped drastically by over 80 percent to Rp 350 per kilogram this month, from Rp 1,500 per kilogram in January.

Farmers fear the prices will plunge further come harvest time.

Some 217 hectares of corn fields throughout the province are expected to yield more than 804,000 tons of corn.

The head of the Ministry of Agriculture's Food Crop and Horticulture provincial office in Lampung, Soebagiono, said that a boom in the corn yield this year was expected after the poor harvest last year.

"But the boom in the harvest will also have a negative effect for corn farmers, since the price of corn may drop below Rp 250. If this happens, corn farmers will suffer great losses."

He acknowledged there were rumors among local corn traders and farmers that the low price of their product was due to reluctance among feedmillers to store corn on a large scale.

"Feedmillers storehouses are still full of their old stocks. They do not want to buy corn anymore. That's why the price has dropped significantly," Sutrimo, a corn trader in Lampung, told the news agency.

The chairman of the Association of Feedmeal Producers, Boediarto Soebianto, has urged the government to find other market access for local harvested corn due to the falling consumption power of the country's feedmeal industry.

He said this year's harvest could reach nine million tons, translating into an excess supply of about two million tons.

"The feedmeal industry consumed at least 3.5 million tons in the past years. This year, it will consume around 1.5 million tons, making an excess supply of about two million tons."

Although he considered the export market a way to off-load the excess supply, he cautioned that the quality of exports would have to be good to attract foreign buyers.