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Jakarta Post

Feed mill business players suffer loss on corn import ban

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Mon, August 10, 2015   /  03:27 pm

The government'€™s recent move to temporarily ban the importation of corn has left vessels carrying 480,000 tons of imported corn stranded in domestic ports and forced business players to pay extra fees as a result, an association says.

Indonesian Feed Millers Association (GPMT) secretary-general Desianto Budi Utomo said the vessels, which were supposed to dock at ports in Medan, North Sumatra; Jakarta and Surabaya, East Java, had yet to acquire permits to unload the shipments due to the ban.

He estimated the feed mill industry players have to pay a daily fee amounting to US$13,000 to the vessel owners for the extended use of the vessels.

'€œThe [permit] letter to unload the shipment has not been issued. [...] Our credibility can be questioned by the suppliers because of this,'€ Desianto told The Jakarta Post on Friday, adding that the ministry had not issued an official letter regarding the ban.

He said the industry was not given enough time to adjust following the government'€™s sudden announcement, which stated that it would temporarily ban corn imports for an unspecified amount of time in its bid to boost local corn production.

Along with the ban, the government planned to carry out a review to calculate the stocks and needs of corn imports, while the State Logistics Agency (Bulog) was temporarily assigned to control the imports.

'€œThey should manage the buffer stock of local corn. If they can provide a buffer stock for 2 million tons, imports can be stopped. Now, the buffered stock is not there yet but it has been stopped,'€ Desianto added.

The government aims for corn production to reach 20.31 million tons this year, a 4.1 percent increase from 19.5 million tons last year.

Desianto said that usually around 22 to 27 percent of national production was available for the industry, still short of the industry'€™s target to produce 16.5 tons of feed mills this year, which requires 8.5 million tons of corn.

Based on the association'€™s calculation from the national production forecast, local production will only provide around 5.5 million tons of corn, resulting in a shortage of around 3 million. Last year, the country imported 3.1 million tons of corn, according to data from the Central Statistics Agency (BPS).

As of June, the industry had imported 1.65 tons this year, Desianto said.

To make up for the shortage, the association planned to not just rely on big traders but reach out to farmer groups (Gapoktan) in remote areas, which resulted in additional cost for the shipments.

'€œIt would not be cost efficient as we would have to go to remote areas, while big animal feed plants require almost 2,000 tons of corn per day,'€ Desianto added.

Another measure is to cut down the use of corn in poultry feed, which made up to 92 percent of production, to 40 to 45 percent from the initial 55 percent, by substituting it for energy sources such as grain and sorghum, even though its use would need additional enzymes that would increase cost.

Desianto also warned the government of the inflation following the possibility of price increases of local corn after the ban.

Previously, Agriculture Minister Amran Sulaiman stated that the import ban was not intended to halt animal feed industry growth.

'€œWe are not against imports, we are only adjust imports to the country'€™s need for them,'€ Amran said.

He claimed that the rise in corn production had caused some corn producing areas such as Gorontalo and West Nusa Tenggara to export the commodity.

Desianto slammed the statement and said that the government should not see the exports as sign of production overflow, citing example such as the Dompu area in West Nusa Tenggara, which exported to the Philippines for cost efficiency. (fsu)

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