International Egg and Poultry Review - By the USDA's Agricultural Marketing Service - This is a weekly report looking at international developments concerning the poultry industry, this week covering the heatwave in europe and Indonesia's import ban.

Indonesia

Economic growth and more stable security in rural areas has led to improvements in poultry production. The Indonesian Rupiah (IDR) strengthened nearly 12 percent against the dollar during the first six months of 2003 compared to the same period in 2002.

Feed accounts for about 60-65 percent of the cost of chicken production and the feed industry is dependent on imported corn, soybeans, etc. Due to the dependency on imported raw materials, the domestic chicken industry cannot compete with other countries. To reduce the dependency on the imported corn, the Government of Indonesia (GOI) is starting to encourage domestic corn industry to increase production.

Most of the poultry production is still carried out through contract or partnership with the large integrators. Poultry farmers depend on the them for day old chick supply, poultry feed, and other necessary inputs. With relatively low per capita broiler consumption, an increasing population and economic growth, prospects for further output growth remains bright. However processing and cold storage deficiencies continue to create bottlenecks in distribution and marketing.

Chicken meat has been contributing more towards Indonesia’s national meat consumption. Post estimates the broiler meat consumption in 2003 to reach 733 million MT, or 3.4 kg/capita/year. With the expectation for continued improvement in the overall economy, consumption in 2004 is forecast to continue grow to 791 million tons or 3.7 kg/capita/year (215 million population in 2003). There is a trend and preference for Indonesian consumers to consume medium birds (1.4 kg or slightly over 3 pounds).

The ban on imported chicken parts implemented in September 2000 continues. As a result, poultry meat imports from the U.S. have dropped sharply. In 2000, U.S. export of chicken leg quarters totaled 11,440 MT, compared to 432 MT in 2001 and 24 MT in 2002. In contrast, Indonesian chicken meat exports to Japan are increasing in the form of boneless chicken and further processed products. In 2002, the total export value of frozen poultry parts to Japan was US $4,827,735, an increase of 73 percent over 2001.

Despite repeated efforts by the U.S. Embassy in Jakarta to seek a resolution, the ban on poultry part imports (implemented in September 2000) remains in effect. While concern over "Halal" certification was used as justification for the barrier, the GOI action should be viewed as a direct response to request for protection from domestic producers.

Heat Wave in Europe

The drought and heat wave in Europe is resulting in huge losses to agriculture. High temperatures around Europe broke records as temperatures in large parts of Europe climbed above 104 F. Sustained highs reaching 113 F have been reported in southern Spain.

Farmers in some areas called in the fire brigade to hose down animal sheds and sometimes even the animals. In France, over a million chickens were reported killed by the heat in one week. Losses were reported in Britain, the Netherlands and Spain. The heat is also slowing the growth of chickens. In Spain, chicken prices climbed more than 35 percent in early August due to tight supplies of poultry. In the UK prices were reported 20 percent higher by mid-August.

Farmers are calling for funds from the EU’s common agricultural policy (CAP). The CAP’s $50 billion budget totals half of the EU’s finances. In France, the trade association CFA asked the government for financial aid within the framework of emergency farming provisions.

Shrinking EU crops and rising domestic prices had already prompted the Commission to suspend future export tenders indefinitely in order to conserve domestic supplies. The tightening EU grain supply situation could encourage more domestic feeding of rye, though rye’s use in hog and poultry rations is limited and internal transportation costs are high. The EU agreed to sell hundreds of thousands of tons of surplus rye, barley and sorghum government stocks for use in animal feed. In addition, the EU has also agreed to advance payments to farmers, who face cuts in yields of main crops by as much as 25 percent, as part of a plan to help European farmers.

Further information

To view the full report, including tables please click here

Source: USDA's Agricultural Marketing Service - 19th August 2003.