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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

07 August 2013

USDA GAIN: Indonesia Grain and Feed Update July 2013USDA GAIN: Indonesia Grain and Feed Update July 2013

After relatively normal weather in Calendar Year (CY) 2012, Indonesia is experiencing another wet dry season in CY 2013. High rainfall intensity continues to the second crops cycle starting in April through July. As a result, corn harvested area is expected to decrease from 3.12 million hectares in Marketing Year (MY) 2011/12 to 3.05 million hectares in MY 2012/13. Paddy crop area in MY 2012/13 is expected to increase to 12.19 million hectares from the previous MY 2011/12 of 12.16 million hectares, but yield is expected to decline slightly to 4.721 tons per hectare.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

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After having a relatively normal weather in 2012, Indonesia is experiencing another wet dry season. Indonesian statistics agency’s recent release of their first forecast figures for Indonesian food crops production confirmed that there will be a decline in Indonesian corn production. However, Post estimates that the decline in MY 2012/13 Indonesian corn production will not be as much as in MY2009/10 and MY2010/11, based on the following facts:

  1. Post’s June field visits to East and Central Java revealed that most areas experienced very modest impact due to weather conditions as compared to MY 2010/11. Therefore, the overall impact has been less severe this year.

  2. Farmers association in Central and East Java reported that despite the weather anomaly that causes some farmers on irrigated low land area to switch to grow rice, there are some farmers on upland area who normally grow peanuts or leave their land idle during the dry season switched to growing corn.

  3. Higher prices of corn due to the higher demand from feed mills and feed mills association strategy of setting some kind of floor price for corn becomes another incentive for growing corn. The association set the floor price of corn in North Sumatera and West Java at Rp. 2,800/kg ($281/MT), in Lampung at Rp. 2,600/kg ($261/MT), in Central and East Java at Rp. 2,700/kg ($271/MT), and in South Sulawesi at Rp. 2,450/kg ($246/MT).

  4. Local corn demand from feed mills is higher because government keeps the unofficial restriction on corn imports in place. The market assurance also encourages farmers to growing corn.

  5. Hybrid corn seed producers reported that as of June farmers demand for hybrid corn seed is still high. Apparently the seed producers took a lesson from what happened in MY 2009/10 and MY2010/11. The strategy of selling more downy mildew resistance seed managed to maintain the seed sales. This also leads to lower downy mildew incidents compared to MY 2009/10 and MY 2010/11. By the time the seed producers learnt about the abnormal weather pattern, they also forced the marketing agents to promote hybrid seed sales more to farmers on upland areas. This encouraged farmers who normally grow soybean, peanut, or leaving their land idle during the second crop cycle to grow hybrid corn. However, rainfall situation in August will determine the level of Indonesian corn production decline.

Currently, some farmers on upland rain fed areas are harvesting the corn. The first and major corn planting season normally takes place from November to February (49 percent). The second planting season takes place from March to June (37 percent). The last one occurs in July to September (14 percent). So far, there is no report on significant challenges with pest and/or disease outbreaks.

Source: Indonesian National Statistics Agency (BPS)

Currently, prices of corn at farmer level ranges from the lowest of Rp. 3,550/kg ($356/MT) in Sumatera to the highest of Rp. 3,700/kg ($371/MT) in Jakarta. On the other hand, the price of broiler feed managed to be stable at Rp. 6,200/kg ($622/MT) to Rp. 6,500/kg ($652/MT), while the price of layer feed ranged from Rp. 5,100/kg ($512/MT) to Rp. 5,400/kg ($542/MT) for the last three months.

Based on the aforementioned factors, Post decreased MY 2012/13 Indonesian corn harvested area to 3.05 million hectares from the previous estimate of 3.12 million hectares. In line with the decline in harvested area, Post also decrease MY 2012/13 corn production to 8.5 MMT compared to the previous estimate of 9 MMT. Assuming weather will return to normal that will provide incentives and opportunities for farmers to grow more corn and more hybrid corn use, Post maintained Indonesian MY 2013/14 corn harvested area and production at 3.15 million hectares and 9.2 MMT respectively.


Most of Indonesian corn farmers still use composite seed due to the favorable taste of composite corn seed that are grown for human consumption. Hybrid corn seed grown is mostly earmarked for feed consumption. Indonesian Feed Millers Association (Gabungan Pengusaha Makan Ternak, GPMT) forecasted that in CY2013 feed consumption would reach approximately 14 MMT higher than the previous estimate of 13.8 MMT. This volume is excluding 1.2 MMT used for aquaculture feed. The poultry industry consumes approximately 83 percent of the total feed consumed. Aquaculture consumes 11 percent and the balance of six percent is consumed by cattle and swine. Currently there are a total of 68 feed mills with a total installed capacity of 18.5 MMT per annum. This industry is estimated to grow by 12- 15 percent this year assuming the economic and political situation remains stable; there are no significant outbreaks of poultry diseases; and a relatively stable Indonesian rupiah against the U.S. dollar. The existing feed millers are running at 70 – 80 percent of the total installed capacity.

With the increasing feed production capacity and higher demand from the livestock sector, GPMT reported that in MY 2012/13 feed industry will need to import more corn than in previous MY2011/12. However, claiming that CY 2013 Indonesian corn production will reach 19.8 MMT, the Ministry of Agriculture (MOA) continues to maintain unofficial import quota in place. Only feed millers can import corn, and not traders. In order to be able to import corn, a feed miller must obtain an import recommendation from the MOA. The MOA will grant the volume of corn that can be imported based on the actual feed production of the feed millers.

Considering the above given factors, Post estimated the MY2012/13 corn consumption by feed industry to increase to 6.9 MMT compared to the previous estimate of 6.4 MMT, while a total of 4.5 MMT of corn will go for human consumption. In MY 2013/14 these corn consumptions for feed industry and for human food consumption will remain stagnant.


Corn contributes to 80 percent source of energy in feed. Despite higher domestic production, seasonal supply, high moisture content, and aflatoxin resulted from improper post harvest management, combined with higher installed capacity of feed millers will continue to drive imports. Therefore, Post estimated that MY 2012/13 Indonesian corn import to increase to 2.7 MMT compared to the previous estimate of 1.9 MMT. Post forecast that Indonesian corn imports in MY 2013/14 to decrease to 2.2 MMT due to the more corn availability from domestic production.


In July 2013, the price of local corn in Java at farmer level is reportedly at Rp. 3,600/kg ($361/MT) compared to Rp. 3,300/kg ($331/MT) in June 2013. The increasing prices are due to smaller supply from farmers. The price of local corn in Sumatera is recorded at Rp. 3,550/kg ($356/MT) compared to Rp. 3,400/kg ($341/MT) in the previous month.

Rice, Milled


MY 2012/13 Indonesian rice production is expected to marginally increase over the previous MY 2011/12 due to the following factors:

  1. The wet dry season provides an opportunity to farmers on rain-fed upland and low land areas to continue growing paddy during the second crop cycle when during the normal weather condition those farmers would grow secondary crops or even leave the land idle.

  2. Farmers reported that rainfall during the grain filling and harvest time reduced yield especially to those crops on Java and Sumatera. Farmers also require more time to sun-dry the recently harvested paddy.

  3. However, CY2013 wet dry season comes after the considerably normal weather in CY2012 when farmers went back to normal cropping pattern. Majority farmers on irrigated low land area grew paddy two times followed by growing secondary crops, while those on rainfed lowland and upland area grew paddy one time followed by growing secondary crops, either two times or left the land idle during the third crop. The normal cropping pattern cut the consecutive planting of paddy since 2009 which led to high pest and disease incidents in MY 2009/2010 and MY 2010/11. Less pest and disease incidents help to prevent further decline of yield due to the photosynthesis problems in MY 2012/13. Currently, the second main harvest of paddy on Java is still going on. During field visits in June, post observed that there were also some farmers who had to harvest the paddy sooner due to some brown hoppers attacks. However, the area affected by brown hoppers is not as significant as in MY2009/10 and MY2011/13. Therefore, for the time being, it is expected that the yield decline will not be as bad as in MY 2009/10 and MY 2010/11.

Note: *: As of June 2013

  1. Based on reports from major international weather and climatology institutions, CY2013 will not be affected by a strong La Nina as was the case in CY2010 and CY2011. This is expected to prevent further loss related to weather anomaly.

Source: BPS


In MY 2012/13 the Indonesian national logistics agency (BULOG) set its procurement target at 3.2 MMT of milled rice equivalent. This level is lower than the procurement target set in previous MY 2011/12 of 3.67 MMT due to the lower allocation for rice for the poor program (raskin). As of mid of July 2013, BULOG has procured a total of 2.47 MMT of rice from farmers. The procured volume is also lower compared to the same period of the previous MY 2011/12 of 2.56 MMT due to delayed harvest in some Indonesian major producing areas. The period of March through June is the peak period of BULOG to meet its domestic procurement target by buying rice from farmers.

GOI obligates BULOG to hold a minimum stock of 2 MMT by the end of the year. As of mid July 2013 BULOG held a total of 2.98 MMT of milled rice equivalent in its storage. BULOG also holds a total of 280,000 MT of government rice reserve. Assuming that BULOG will be able to reach the procurement target from domestic farmers, combined with the rice distribution for raskin program, BULOG will manage to maintain the secure level for MY 2012/13 ending stock. This means that BULOG may not need to import rice from the international market in MY 2012/13. However, as a precaution, BULOG recently sought government to government (G to G) cooperation with Myanmar to provide rice in case there would be any production shortage. The same G to G cooperation has been in existence between Indonesia – Thailand and Indonesia – Vietnam. Indonesian Minister of Agriculture at a recent press release also stated that MOA may agree to authorize BULOG to import no more than 500,000 MT of rice in the coming of the 2014 election year.

Other than importing rice through BULOG, Indonesian private sector also imports specialty rice for specific purposes such for diabetic rice, rice for restaurants, and seed. The high price disparity between Indonesia’s domestically produced rice over Vietnamese and Thai 15 percent broken rice will continue to provide incentives for unauthorized imports, especially through the more porous Indonesian border areas.

Source: Cipinang wholesale rice market, The Rice Trader, processed by FAS Jakarta

Assuming the same amount of specialty rice, smuggled rice, and potential imports at the end of the year, Post forecasts that MY 2012/13 Indonesian rice imports to reach 1 MMT. Indonesia is facing an election year in 2014 when each participating party will put some efforts to have a positive image among the people. One of the many indicators considered as a success is when the ruling regime limits rice imports as a tool to protect farmers. However, lower MY 2012/13 ending stocks combined with marginal increase of MY 2013/14 Indonesian rice production may increase prices of rice in the domestic market. Post assumes that there would be slightly higher unauthorized imports in MY 2013/14.

Indonesia is the 4th most populous nation in the world with a population of roughly 240 million people. Over 50 percent of the population is between the ages of 5 - 34 years. The emerging middle class and consumers from the Indonesian middle class broadly support domestic industry and imported goods. Eating out culture becomes new lifestyle. There are many new players in Japanese, Indian, and Korean restaurants. The new trends will increase imports of specialty rice. Post forecast MY 2013/14 Indonesian rice imports to remain on par at 1 MMT due to slightly higher unauthorized imports combined with higher demand for specialty rice.


As compensation to GOI decision in increasing fuel price at the beginning of July, in MY 2012/13 BULOG increases it total rice allocation for raskin (rice for the poor) program to 3,261,488 MT. The rice will be distributed to 15,530,897 poor families. Each family will receive 15 kg of rice for 15 months at the price of Rp. 1,600/kg. As of the mid July 2013, BULOG has distributed a total of 1.7 MMT of rice under the raskin program.

Some of the rice held by BULOG is going for BULOG’s market operation in order to dampen the price of medium quality rice in the domestic market. During the period of January to July 2013 a total of 85,000 MT of rice has been distributed into the commercial market.

Post revised estimate of MY 2012/13 Indonesian rice consumption to increase to 39.55 MMT to reflect Indonesian population diet diversification to wheat-flour-based food products. The consumption will slightly increase to 39.8 MMT in MY 2013/14.


MY 2012/13 ending stock of Indonesia rice is estimated to decline to 3.085 MMT due to lower imports. Post forecast that the ending stock of MY 2013/14 will further decline to 2.485 due to the same reason.

August 2013

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