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Indonesia corn import block to raise poultry, egg prices

JAKARTA, Indonesia - Indonesia's recent move to block imports of corn for feed mills will cause wholesale poultry and egg prices to rise at least 6 percent over the next month, the Indonesian Poultry Farmers Association said Aug. 4.

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JAKARTA, Indonesia - Indonesia's recent move to block imports of corn for feed mills will cause wholesale poultry and egg prices to rise at least 6 percent over the next month, the Indonesian Poultry Farmers Association said Aug. 4.

Indonesia, which imports corn mainly from Argentina and Brazil, stopped issuing import permits for corn used in feed mills in July as it made a broader push for food self sufficiency.

Corn demand in Southeast Asia's largest economy has grown in recent years amid rising wealth and higher poultry demand, and critics warn curbing imports could stoke concerns about inflation, which was at a higher-than-expected 7.6 percent in July.

"This policy has good intentions, but it was too sudden, without any preparation," Association Chairman Hartono said.

"This three million (metric tons) of corn per year can provide jobs for so many people here," he said, referring to the volume that had been slated for import this year.

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Corn traders had pushed up prices of the grain sold locally to breeders by 10 percent after news on import curbs, Hartono said. "Brokers are the ones who benefit from this situation."

According to the Indonesian Feedmill Association, the country was expected to import around 430,000 metric tons of corn from July to August. Shipments are now being held up at ports including in North Sumatra, Banten and East Java, it said.

The government has allowed feedmills to receive corn shipments that arrived in Indonesiain July and early August on condition the state logistics agency supervises the process from unloading to distribution, Desianto Budi Utomo, Secretary General of Indonesian Feedmill Association said.

However, no decision has been made on contracts beyond this month, he said. "We can't declare default yet for September and October shipments."

Animal feed prices will increase as mills substitute corn with other grains such as wheat and palm kernel, which are more expensive and need additional enzymes to process, Utomo added.

Poultry prices will, as a result, go up.

Poultry rates are currently at around 22,000 rupiah ($1.63) per kilogram, Hartono said from the poultry farmers association. There is room for gains given an expected growth in demand.

Indonesia has signed a deal to resume poultry exports to Japan after a decade hiatus, while global commodities giants including Cargill Inc. and Indofood Sukses Makmur have plans to invest in Indonesia's poultry sector.

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Poultry feed firms with an Indonesian presence include PT Japfa Comfeed Indonesia, PT Malindo Feedmill and PT Charoen Pokphand Indonesia. ($1 = 13,483 rupiah)

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