The prices of live chickens are starting to stabilize after the government discarded millions of eggs and poultry farmers gave away thousands of live birds after seeing that per kilogram live chickens cost less than a pack of cigarettes.

The price of live chickens touched a low of Rp 8,000 (57 US cents) per kg since August because of oversupply, less than half of the fair price of between Rp 18,000 and Rp 20,000 per kg set by the Trade Ministry’s floor price (HPP) and the lowest price in years.

However, now the price is stabilizing at about Rp 15,000 per kg in West Java and Rp 17,500 per kg in Central and East Java, according to the National Poultry Breeders Organizations (Gopan). In comparison, the price of a pack of cigarettes, which are harmful, but are considered to be widely purchased by the poor as a substitute for food because they are highly addictive and help to suppress appetite, starts at about Rp 13,000.

“Even though the price is still below the HPP, we are seeing a significant improvement since our protest a week ago,” said Gopan secretary-general Sugeng Wahyudi, hoping that the price would stay steady for a long time.

Amid the fluctuations of live chicken prices, the retail price of poultry meat throughout the year has stayed at about Rp 30,000, according to the Information Center for Strategic Food Prices (PIHPS). However, the price is still relatively low, prompting fast-food chains like KFC and McDonald’s to sell their popular fried chicken at a bargain for consumers.

Although consumers may find it convenient that chicken prices are low, farmers suffer from low selling prices and profit margins for their small business operations. Poultry farmers in Central Java and Yogyakarta reached a point where they gave away thousands of their birds in June to protest the oversupply, which caused the average price to increase a little.

Achmad Dawami, the deputy head of the commercial poultry division of PT Japfa Comfeed Indonesia, one of Indonesia’s biggest integrated poultry companies, said the oversupply happened because domestic consumption was still low. Indonesian chicken consumption reached 12 to 13 kg per capita per year, while Malaysians consumed 36 kg to 38 kg per capita per year.

“Farmers don’t know the volume of chicken demand. In 2016, the government estimated that chicken consumption would be 15 kg per capita, but in reality it was only 12 kg to 13 kg per capita per year. So we have a tendency for oversupply,” he said.

Hundreds of independent poultry farmers protested in front of the Office of the Coordinating Economic Minister building in Jakarta on Sept. 5 because of a steep drop in live chicken retail prices.

For its part, to resolve the chicken oversupply the Trade Ministry has issued a circular that recommends breeders reduce the numbers of day-old chick final stocks (DOC FS) by removing as many as 10 million fertile eggs from hatcheries each week from Sept. 2 to 20.

The ministry through its Husbandry and Animal Health Agency also recommends 45 poultry companies delay the setting of 10 million hatching eggs, which could be given to schools as part of their corporate social responsibility (CSR) program.

“Government’s initiatives to reduce hatching eggs and day-old chicks have shown positive effects this week as we began to see a balance of supply and demand in the market,” said Achmad.

For publicly listed Japfa, billions of rupiah in losses have been booked from its commercial farms, which produced 70 million day-old chick final stocks because it was advised to reduce hatching eggs and the DOC population.

“We had to put more meat in cold storage until the price is normal again,” said Achmad, also hopeful that the recent uptick in live chicken prices would be sustainable so it can reach up to Rp 21,000 per kg next month.

The Agriculture Ministry reported that the potential demand for poultry meat this year is 3.2 million tons, about 270,000 tons per month.

Meanwhile, as of August, the actual production numbers were 2.3 million tons, an average of 291,000 tons, which means there has been a 7.29 percent chicken meat surplus.

As prices begin to stabilize, new threats of oversupply stem from the import of Brazilian broiler chickens following a dispute settlement in August by the World Trade Organization, which ruled in favor of Brazil.

Brazil challenged Indonesia over the import issue at the WTO in 2014 and won in 2017.

However, as Indonesia did not open its markets immediately, Brazil went back to the WTO again, leading to the settlement.

Trade Minister Enggartiasto Lukita said his office would apply trade remedies such as halal and sanitation certification to halt the imports without breaching the WTO's rules.

Sugeng said that local breeders needed the government to adjust the price of chicken feed corn so that they could compete with Brazilian chickens when the nation’s markets were open for imports.

“More than 50 percent of our livestock feed is from corn, so if the government can lower the price of corn, we can potentially lower the price of our chickens,” he said. (eyc)

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