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oultry industry players have denied the allegation from an antimonopoly agency that they have acted like a cartel by controlling production, leading to an oversupply and falling prices and leaving small farmers with financial losses.

The Business Competition Supervisory Commission (KPPU) has alleged that 12 companies, including poultry giants Japfa Comfeed Indonesia and Charoen Pokphand Indonesia, coordinated with each other to produce an oversupply of chicken and the concurrent fall in price.

Commission head M Syarkawi Rauf said recently the selling price for chickens from farmers was now about Rp 9,000 (67 US Cents) per kilogram, not even enough to cover the standard production cost of Rp 18,000 per kg.

Earlier in February, the selling price was around Rp 30,000 per kg.

'€œBesides the oversupply, these companies have also dominated the market with their own chickens that they possibly produce at a much lower production cost,'€ Syarkawi told The Jakarta Post recently.

However, Japfa marketing director Budiarto Soebijanto said that there was no such cartel as the 12 companies had not cooperated with each other deliberately to create an oversupply or to rule the market price.

'€œThe allegation regarding cartel behavior is not true as we don'€™t cooperate on anything together,'€ Budiarto said.

He said his company had also complied with the Agriculture Ministry'€™s instruction to perform mass culling to reduce parent stocks and help small farmers get a good price in the market.

Budiarto added that the current oversupply was caused by the KPPU itself as the agency had instructed the ministry to stop the mass culling in the middle of December.

'€œSo, we didn'€™t perform mass culling in mid-December and that led to an oversupply two months after that,'€ he said.

Last year, Muladno, the ministry'€™s general director for livestock and animal health, instructed at least 12 companies to perform mass culling operations on around 6 million parent stock in three stages to reduce a poultry oversupply that had left small farmers desperate from losses due to the extremely low selling price.

'€œSo, we culled 2 million in October then only 1 million in December as we couldn'€™t continue it when KPPU told the ministry to cease it,'€ Budiarto said.

Budiarto recalled the year 2014 as a difficult time for small farmers as there was an oversupply of live chickens originally caused by an oversupply of parent stock. In 2013, there was flood of parent stock imports under the previous government of Susilo Bambang Yudhoyono.

Syarkawi, on the other hand, said mass culling was not the best solution as it could lead back to shortages in the future and a flood of imports again.

'€œThe best temporary solution to tackle falling prices is for the Trade Ministry to set floor and ceiling prices for live chickens so small farmers can still benefit and compete with the giants.'€

'€œAlso, the government can amend Law No. 41/2014 on Livestock and Animal Health that allows big companies to also sell products to local markets. Under the old law, their local sales were limited,'€ he said.

Desianto Budi Utomo, secretary general of the Indonesian Feed Millers Association (GPMT), also said the low prices were not caused by cartel activities but by troubled distribution mechanisms and the inability of small farmers to compete with poultry giants.

Desianto acknowledged the possibility of market domination by the giants as they had far more advanced technology and were integrated producers with lower production costs and economies of scale.