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State-owned staple food holding firm to be formed by September
Company expected to boost production through land acquisition
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ine state-owned enterprises (SOEs) plan to consolidate into a basic foods holding company by the third quarter of this year in improving Indonesia’s food security, farmers’ welfare and the agriculture industry’s modernity.
Diversified food manufacturer PT Rajawali Nusantara Indonesia (RNI) is set to become the holding entity for all nine constituent companies whose combined assets are worth Rp 28 trillion (US$1.94 billion).
The eight SOEs are RNI, fishery companies Perum Perikanan Indonesia and PT Perikanan Nusantara, agribusiness firms PT Pertani and PT Sang Hyang Seri, logistics firms PT Bhanda Graha Reksa (BGR) and Perusahaan Perdagangan Indonesia (PPI), chicken and cattle producer PT Berdikari and salt maker PT Garam.
“We are going to consolidate a supply chain from the input down to the end, including in warehousing and retail,” said RNI president director Arief Prasetyo Adi in a virtual press conference on Thursday.
RNI, which has the largest asset value among the nine, mainly produces sugar – a business that contributes nearly half of its annual income – but it also produces tea, palm oil, leather goods and condoms, among other products.
Indonesia, the world’s fourth-most-populous country, went down three ranks in the Global Food Security Index from 62nd in 2019 to 65th last year, the second-lowest among the six major ASEAN economies after the Philippines, mainly due to Indonesia’s limited dietary diversity.
Statistics Indonesia (BPS) data show that Indonesia’s Farmers Exchange Value (NTP), a benchmark indicator of farmers' livelihoods, dipped 0.35 percent month-on-month to 102.93 points in April, amid declining prices in some basic foods and horticultural products. The indicator is, however, higher than during the same month last year.
Establishing the holding company is one of the President Joko “Jokowi” Widodo administration’s strategies to raise agricultural output that also includes establishing new food estates in Central Kalimantan and North Sumatra.
“It is hoped that the consolidation of these nine SOEs can really increase their food productivity and improve national food security and sovereignty,” said Deputy SOEs Minister Pahala Mansury in a statement on Thursday.
However, the new holding structure undoes a previously planned structure wherein the State Logistics Agency (Bulog) acts as the holding company for SHS, Pertani, BGR and PPI. Bulog president director Budi Waseso said on Feb 23 that the agency was excluded because the SOEs Ministry had other plans for Bulog.
Read also: Bulog appointed as holding company in food commodities
Arief said the new holding company would ramp up food production by acquiring more land, creating more partnerships, improving price transparency and lowering logistics costs.
The nine companies have formed seven project management offices (PMO) to steer the consolidation. They cover the business development, financial, supply chain and IT, human resources, asset optimization, legal and holding strategy aspects of integration.
Some of the companies plan to merge into “clusters” of similar industries – fisheries, agribusiness and logistics – then consolidate into a singular staple food holding company.
The two state-owned fishery companies previously confirmed plans to merge by June this year. The merger is hoped to raise their combined compound annual growth rate (CAGR) to 26 percent over the next five years.
Read also: Fishery SOEs eye robust growth after planned merger this year
PPI president director Nina Sulistyowati, also on Thursday, reaffirmed that PPI and BGR would merge into one company then “be present all along the holding firm’s supply chain, including in the marketing of food products.”
The holding company expects to replicate BGR’s high-tech warehousing management technology in all constituent company's systems in improving logistical efficiency.
Similarly, SHS president director Karyawan Gunarso reaffirmed that SHS would merge with Pertani and added that “as our main product, saplings will be SHS’ and Pertani’s business-of-focus going forward.”
RNI is in talks with the Finance Ministry’s State Assets Directorate General (DJKN), the Law and Human Rights Ministry, the SOEs Ministry and the Coordinating Economic Ministry to create a government regulation as the legal basis to form the holding company.
