On Wednesday, the state court annulled the KPPU’s accusation and released 11 companies from paying administrative sanctions amounting to Rp 119.67 billion (US$8.8 million).

The remaining company, PT Ekspravet Nasuba, was found guilty of culling but was not fined by the KPPU because it was done out of business strategy considerations.

The KPPU had accused the 12 firms — including poultry giants Charoen Pokphand Indonesia, Japfa Comfeed Indonesia and Malindo Feedmill — of colluding to cull chicks in a bid to drive up prices.

The KPPU noted in September 2015 that day old chicks (DOC) were sold at less than Rp 4,200 per head, but after a mass culling of 2 million parent stock (PS) chickens in October, the price of DOC surged to between Rp 4,500 and Rp 6,000 per head, resulting in losses of up to Rp 224 billion for farmers who bought DOC from the big firms.

However, the chairman of the panel of judges overseeing the case at the West Jakarta State Court, Agus Setiawan, said the mass culling of PS by the firms that year was in accordance with the ministry’s instruction and was not done out of a collective agreement, meaning that it did not breach the 1999 Business Competition Law.

KPPU chairman Syarkawi Rauf said the institution had not obtained a verdict letter from the court, so it would wait for the letter to arrive before taking any further action.

“Usually what we do for cases that we lose at the State Court is we appeal to the MA [Supreme Court] but we need to study the State Court decision letter first, which we have not yet received,” he told The Jakarta Post.

Businesspeople have repeatedly stated that the ministry ordered the mass culling to reduce an oversupply of PS, which had occurred as a result of excessive imports in 2013, when the government aimed to boost people’s chicken consumption. The excessive imports led to an extraordinary oversupply two years later.

Big firms grouped under the Indonesian Feed Millers Association (GPMT) lauded the court’s verdict.

“This brings positive winds to the poultry industry. Now, we’re no longer worried about being thought of as a cartel, if we give production data to [or communicate with] the ministry,” said GPMT chairman Desianto Budi Utomo.

Small and medium farmers under the National Chicken Husbandry Organization (Gopan) also noted that the KPPU’s accusation had forced big firms to take government and institutional authority seriously even though it was annulled, leading to more transparent information on production and business practices.

“The KPPU’s accusation, even though it has been annulled for now, is a good start to fixing the chicken industry’s compliance with government policies, because before that, [the chicken industry] was a mess,” Gopan secretary general Sugeng Wahyudi told the Post on Sunday.

According to Gopan, the price for live birds is currently hovering between Rp 17,500 and Rp 18,000 per kilogram, far better than the Rp 10,000 per kg back in 2015, when small farmers cried of losses due to the low price.

Earlier this year, the Agriculture Ministry instructed firms to cut egg production by 9 percent from a production rate of around 63 million broilers per week in March, in order to reduce oversupply. Moreover, it has also formed teams for data production and ordered breeders to report their reduction process on a regular basis.

Meanwhile, the Animal Farm Board recently announced that neighboring Malaysia plans to import chickens and ducks from Indonesia.

Malaysia needs at least 30,000 DOC monthly and 10,000 day-old laying ducks (DOD) monthly.

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