Unsold imported corn to be exported

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.