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TRADE.

1. STILL SMALL, BUT IMPORTS OF CHICKEN MEAT INCREASE

The country's imports of chicken meat are relatively small - only a few tons - but have steadily increased with certain quality.

In 1999, rising prices on the domestic market prompted imports especially to supply fried chicken restaurants and supermarkets. In 1999, imports surged to 4,105 tons valued at US$ 2.84 million, from 346 tons valued at US$ 347,000 in 1998.

Table - 1 Imports of chicken meat, 1995 - 1999
 Volume Value
Year (tons) (US$ '000)

1995 160 153
1996 485 334
1997 449 370
1998 346 347
1999 4,105 2,835



Source: CBS/Data Consult

Population of pure dred chickens down

The economic crisis has served a severe blow to business in poultry farming. Many small and medium scale farms went bankrupt resulting in a 50% drop in the population of pure bred chickens to 481 million in the country in 1998 from 954.5 million in 1997.

On October 7, 1998 the government issued new license for breeding farms to raise pure bred chickens to meet growing demand ahead of religious day celebrations. Earlier, in a bid to protect small and medium scale chicken farmers, the government had banned breeding of pure bred chickens either broilers or egg layers.

In 1999, when the rupiah was relatively stable at 7,000 to the U.S. dollar small and medium scale poultry farms began to grow resulting in a increase of 15% to 564.7 million in chicken population that year.

Assuming that a broiler would be ready for slaughtering after 3 months, the population of broilers ready for slaughtering in 1999 was 3/4 of that population that year or 376,905. If a broiler meat is 2 kg each, broiler meat production that year totaled 753.8 million tons that year.

Table - 2 Population of egg layers and broilers, 1994 - 1999 (000 heads)
 Growth
Year Layer Broiler Total (%)

1994 63,335 622,965 686,300 -
1995 69,000 669,793 738,793 7.6
1996 77,600 755,100 832,700 12.7
1997 86,480 868,000 954,480 14.6
1998 56,000 435,000 491,000 -48.6
1999 62,111 502,539 564,650 15.0



Source: Directorate General of Husbandry/Data Consult

Imports of parent stock down

The surge in the prices of poultry feed in 1998 following the rupiah fall resulting in the closure of many small and medium farms. Demand for day old chickens (DOC), therefore, declined sharply. As a result many pure bred chicken breeding farms were forced to stop operation. Imports of grand parent stock (GPS) and parent stock plunged 93.9% to 57,000 in 1998 from 929,000 in 1997. In 1999, there was almost no change with imports totaling only 60,000. The problem faced by pure bred chicken farms until now is the fact that poultry feed industry still is dependent on import for the raw materials - corn, soybean meal, fish meal, vitamine and minerals. Therefore, when the crisis was at its worst in 1998, the price of poultry feed climbed to Rp 3,000 from Rp 8,000 a kg.

Based on data from the animal husbandry directorate general, the number of companies operating parent stock farms dropped from 101 in 1997 to 22 in 1998 - and the remaining companies operated only at 20-30% of their installed capacity. Those managing to survive the crisis were mainly companies operating integrated industry such as PT Charoen Phokphand. This company produces animal feed, parent stocks and broilers and egg layers. It develops cooperation with plasm farmers that buy DOC from its. In 1998, the company had a 28% share of broiler DOC market. PT Multibreeder had 14%. Multibreeders was more dominant in the market of layer DIC with a market share of 38% with Cipendawa having only a 5.4% share.

Table - 3 Imports of GPS/PS and DOC, 1995 - 1999
 Volume Value
Year ('000 heads) (US$ '000)

1995 1,518 13,447
1996 64 575
1997 929 12,238
1998 57 3,707
1999 60 297



Source: CBS/Data Consult

DOC production up 21% in 1999

In 1998, the production of DOC dropped 48.6% to 399,000. Charoen Phokphand itself was forced to cut production by 50% that year. In 1999, the price of feed began to stabilize. This encouraged growth of small and medium scale farms resulting in a 21% rise in DOC production to 483,000.

The rise in 1999, still was not enough to meet the market demand. Observers blamed the shortage in DOC supply to cartel and monopoly by large producers. Charoen Phokhand, however, attributed the shortage to declining capacity of breeding companies. Imports of parent stock, therefore, were needed and time was needed from 6 to 8 months for the companies to produce final stock in DOC.

Table - 4 DOC production in Indonesia, 1997 - 1999 (000)
 Broiler Monthly Layer
Year DOC production DOC

1997 716,741 59,728 60,340
1998 359,569 29,964 39,449
1999 444,360 37,030 38,640

 (000)

 Monthly Change
Year production Total (%)

1997 5,028 776,469 -
1998 3,287 399,018 -48.6
1999 3,220 483,000 21.0



Source: Directorate General of Husbandry/Data Consult

Exports of chicken meat

In 1996 and 1997, exports of broiler meat were insignificant, but in 1998, farmers sought to export their broiler meat as demand on the domestic market fell sharply. Exporting producers were mainly large integrated industrial companies like Charoen Phokhand and Anwar Sierad. In 1998, exports surged to 2,996 tons valued at US$ 3.34 million and in 1999, exports totaled 2,859 tons valued at US$ 3.93 million. The exports offset a decline in sales on the domestic market.

Table - 5 Indonesia's exports of chicken meat, 1994 - 1999
 Volume Value
Year (tons) (US$ '000)

1994 1,108 3,466
1995 998 3,368
1996 0 9
1997 2 1
1998 2,996 3,336
1999 2,859 3,932



Source: CBS/Data Consult

2. CIGARETTE MAKERS PANICK BUT CLOVE IMPORTS SMALL

Shortage in the supplies of clove cause panic among small and medium scale producers of clove flavored cigarettes. Unlike large producers, small cigarette makers rarely have enough stock. Shortage in supplies to the market therefore was a threat to their existence. However, imports of clove have remained small in comparison with the country's production and consumption.

In 1999, imports totaled 1,184 tons valued at US$ 1.64 million, up from 130 kg valued at US$ 74,000 in 1997. In comparison with imports in the 1970s, the 1999's import was very small. The increase in imports in 1999 was caused by a decline in production. A decline in supply resulted in an increase in price to as high as Rp 30,000 per kg from a previous record of Rp 10,000.

Table - 1 Indonesia's imports of clove, 1995 - 1999
 Volume Value Average price
Year (tons) (US$ '000) US$/Kg

1995 8 13 1,625
1996 0 0 0
1997 0 0 0
1998 1,184 571 0,482
1999 1,776 1,635 0,921



Source: CBS/Data Consult

Asia largest supplier

In the 1970s Indonesia imported clove mainly from Zanzibar, but now the main suppliers are other Asian countries and the United States. The largest imports came from Singapore. Reexports from that country, which has no clove plantation, totaled 860 tons valued at US$ 864,000.

Table - 2 Imports of clove by countries of origin, 1999
Country of Volume Value
origin (tons) (US$ '000)

Singapore 860 864
Pakistan 127 129
USA 93 60
Malaysia 92 111
India 91 133
Philippine 77 77
United Emirat Arab 49 54
Others 387 207

Total 1,776 1,635



Source: CBS/Data Consult

Stocks dwindling

In 1997, the country's clove stocks totaled 131,100 tonsa, down to 76,000 tons in 1999. The decline in stock might have been as a result of a drop in market supply or exports, prompted by the falling value of the rupiah.

A decline in supplies followed harvest failure last year. Harvest failure was recorded in major producing areas including Aceh and Irian Jaya. Big harvest comes every four years. In 1999, productivity was estimated at only 40%. The decline in productivity was also caused by poor maintenance of plantations.

In 1999, maintenance declined as a result of financial problem since 1998 and low price of clove. The condition was worsened by bigger ranfall. The flowers of the plants fell to the ground because of heavy rain. Many cigarette makers were forced to go directly to the production centers to look for clove. The condition was difficult especially for small cigarette companies.

Table - 3 Indonesia's stocks of clove, 1994 - 1999
 Stock Growth
Year ('000 tons) (%)

1994 256.7 -
1995 291.9 13.7
1996 234.5 19.8
1997 131.1 -44.0
1998 100.0 -23.7
1999(*) 76.0 -



(*) Estimate

Source: National Cloves Body (BCN)/Data Consult

Production down

El-Nino and La Nina, the weather phenomenons, caused harvest failure. El Nino caused long drought in 1997 and La Nina brought in heavy rains in 1998. The effects were carried over to 1999 when productivity was estimated at only 40%.

From 1989 to 1998 clove trade was monopolized by the Clove Buffer and Marketing Body (BPPC) which was owned by Tommy Suharto, a son of former President Suharto. BPPC functioned as an intermediary between the farmers and consumers.

BPPC had suggested farmers cut part of their clove trees to reduce oversupply. But even without the suggestion farmers had no longer interest in tending their clove plantations with the falling prices in 1996 and 1997. In 1996 with price at Rp 2,500 a kg farmers had no money to cover he cost of tending their crops. That year clove production fell 34.1% to 59,400 tons.

Table - 4 Indonesia's clove production, 1993 - 1999
 Production Growth
Year ('000 tons) (%)

1993 67.0 -
1994 78.0 16.4
1995 90.1 15.5
1996 59.4 -34.1
1997 59.2 -1.0
1998(*) 58.9 -0.5
1999(**) 50.0 -15.1



(*) tentative;

(**) estimate

Source: Department of Forestry and Plantation/Data Consult

Plantation shrinking

The loss of interest resulted in a decline in plantation areas. In 6 years plantation areas were reduced by 3.8% annually - from 571 hectares in 1993 to 470 hectares in 1998. Farmers chose to grow oil palm trees or cacao trees on their lands. In North Sulawesi, many farmers cut their clove trees for firewood. But in 1999, clove price surged, encouraging farmers to tend their clove trees and expand plantations. As a result clove plantations in the country was estimated to expand 2.3% to 483,000 hectares that year.

Table - 5 Clove plantations, 1993-1999
 Area Growth
Year ('000 Ha) (%)

1993 571 -
1994 534 -6.5
1995 502 -6.0
1996 492 -2.0
1997 482 -2.0
1998 470 -2.5
1999 483 2.8



Source: Department of Forestry and Plantation/Data Consult

3. INDONESIA STILL IMPORTS SODIUM SULPHATE TO COVER SHORTAGE

Indonesia has produced sodium sulphare but imports are still needed to make up for shortage in domestic supply. Sodium sulphate is produced through a reaction between NaCl and sulfuric acid (H2SO4). The chemical is used widely as a feedstock in pulp and paper producing kraft paper, detergent industry and glass industry. Sodium sulphate is produced mainly as a by product in the viscose rayon production.

The country has two producers of sodium sulphate - PT Indo Bharat Rayon and PT South Pacific Viscose with a total capacity of 95,000 tons a year. The two companies are rayon fiber producers.

Indo Bharat Rayon was set up in 1982 with factory in Purwakarta, West Java. It produces rayon fiber with an annual production capacity of 65,000 tons and sodium sulphate with an annual capacity of 35,000 tons.

South Pacific Viscose with factory also in Purwakarta has an annual capacity to produce 60,000 tons of sodium sulphate. It was set up in 1983 as a joint venture between foreign investors from Austria, India and Panama and Indonesia's PT Pura Golden Lion of the Lippo Group.

PT Kanindo Sukses Chemical in Semarang planned to build another rayon fiber plant integrated with sodium sulphate production facility. The plant was to have an annual capacity to produce 40,000 tons of rayon fiber, 20,000 tons of sodium sulphate, 32,000 tons of sulfuric acid, 24,000 tons of caustic soda and 8,000 tons of CS2. However, the project, originally to come on stream in 1994 has not come to a reality.

Sodium sulphate imports totaled 16,455 tons in 1999 not including "other sodium sulphates". Imports fluctuated peaking at 44,343 tons valued at US$ 4.2 million in 1998. In 1999, imports dropped 29.9% to 31,046 tons.

Table - 1 Imports of sodium sulphate, 1995 - 1999 Tons (US$ '000)
 Sodium Other sodium
Year sulphate sulphate Total

1995 36,894 107 37,001
 4,560 43 4,603
1996 27,857 103 27,960
 3,881 101 3,982
1997 37,918 1,788 39,706
 4,280 295 4,575
1998 41,315 3,028 44,343
 4,182 810 4,992
1999 16,455 14,591 31,046
 1,464 1,614 3,078



Source: CBS/Data Consult

China the largest supplier

China has been the largest supplier of sodium sulphate for Indonesia. In 1999, imports from that country totaled 29,121 tons or 93.8% of the country's total imports of the material. See the following table.

Table - 2 Imports of sodium sulphate and countries of origin, 1999 Tons (US$ '000)
Country of Sodium Other sodium
origin sulphate sulphate Total

China 16,170 12,951 29,121
 1,331 1,201 2,532
Hong Kong 100 21 121
 8 3 11
Japan 95 2 97
 74 11 85
Singapore 61 0 61
 21 0 21
Others 29 1,617 1,646
 30 399 429

Total 16,455 14,591 31,046
 1,464 1,614 3,078



Source: CBS/Data Consult
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Publication:Indonesian Commercial Newsletter
Article Type:Statistical Data Included
Geographic Code:9INDO
Date:Jun 27, 2000
Words:2352
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