Cartel Playing with Chicken Prices
The Agriculture Minister Amran Sulaiman said there is a price disparity from farmers to consumers of up to 400 percent. This very high disparity indicates something out of the ordinary. He claimed to have deployed the Food Task Force to all industrial centers, including East Java, Central Java, West Java, and Lampung, to investigate the decreasing price of chicken meat.
Based on the temporary report, persons in a certain capacity are playing with prices. “They are brokers. We will act firmly against them soon. Hopefully, it will return to normal in a short time. That’s our target,” he said in Surabaya, Friday (6/28).
According to him, there is something wrong in the distribution chain, including its very long process, which causes broiler price disparity. “Just like what we did to other food cartels [garlic, rice, and onions]. We will take firm action against brokers who are playing with broiler price,” he said. According to him, there are currently 400 food cartels that have been named as suspects and 782 companies that are undergoing legal proceedings.
Ketut Diarmita also said the same thing. He suspected that persons in a certain capacity are playing with chicken price, so it dropped at the farmer’s level. According to him, this is an economic crime and the Business Competition Supervisory Commission (KPPU) should immediately intervene.
“If the farmer’s price is Rp 8,000, while the price on the traditional market is Rp 22,000, why does the price in Jakarta reach Rp 30,000 - Rp 45,000 per kg? Where is the excess theory that the market doesn’t enjoy cheap prices? Who gets the benefit of this price disparity?” Ketut said.
The oversupply of DOCs and chicken meat was also caused by chicken import policy. Based on the Agriculture Ministry’s data, the oversupply of DOCs reached 1.5 million per day. In 2018, the supply of broiler meat reached 3.64 million tons per year, while its average needs were only 3.25 million tons per year.
Efforts to Save Chicken Farmers
The government plans to re-assess the submission of permit to import DOCs from the integrated livestock companies (integrators). Re-assessment is required to make the calculation of chicken needs and supply more precise. Integrator usually gets the import permit (SPI) issued by the Trade Ministry based on recommendations from the Agriculture Ministry.
"Prior to import, integrator should submit an analysis of the company’s needs. So when a problem like oversupply occurs, the government doesn’t become the scapegoat,” Ketut Diarmita said at the Coordinating Economic Affairs Ministry building in Jakarta, Monday (7/1).
As another effort, the government obliged the slaughtering of broiler parent stock over 68 weeks old. All broiler breeders done this for two weeks, from June 26 to July 9, 2019. This step was also followed by an Integrity Pact between the government and the broiler parent stock breeding companies.
The Agriculture Ministry also requested the poultry business players to increase their slaughterhouse capacity to 30 percent of the total internal live bird production. This is in accordance with the Article 12 Paragraph (1) of the Minister of Agriculture Regulation No. 32/2017 concerning Provision, Distribution and Supervision of Consumption Broilers and Eggs. It also obliged business players with live bird supply above 300,000 per week to have slaughterhouse and cold storage to accommodate their own carcasses.
To help increase prices, the Trade Ministry will directly absorb chicken meat supply from farmers. The chickens will be sold through the ministry’s bazaar event at a price of Rp 32,000 per kg.
“Trade Ministry has advised other ministries and agencies to take part in absorbing the supply of broiler meat from farmers,” Trade Ministry’s Domestic Trade Director General Tjahya Widayanti said on Monday (7/1).
The Trade Ministry also requested the Indonesian Retailers Association (Aprindo) to do the same in accordance with the reference price stipulated in the Ministry of Trade Regulation No. 96/2018. In this case, Aprindo can coordinate with the Association of Indonesian Poultry Slaughterhouses (Arphuin).
Through those efforts, the Agriculture Ministry claimed the price of chicken at the farmer level has begun to increase. According to Ketut Diarmita, farmers’ chicken price in a number of regions are reaching Rp 15,000 - Rp 18,000 per kg. The price increase occurred in almost all central regions, including Central Java, East Java, Bali, and Lampung. There are a number of factors, one of which is the reduction of DOCs and final stock (FS) by the integrator.