In Jakarta, the price of chicken eggs in traditional markets shot up by 30 per cent to 30,000 rupiah per kg this week. -- COURTESY OF SUWARD
JAKARTA (The Straits Times/Asia News Network): Indonesian layer poultry farmer Suwardi, 48, has struggled to cope as the price of chicken feed barrelled 30 per cent higher since September 2020.
Last August, he had to sell 2,000 of his 8,000 layer chickens on his farm in Kendal, Central Java, along with three cows, to keep his business afloat. In the previous months, he had endured monthly losses of around 36 million rupiah (S$3,400).
However, as the price of eggs sold by farmers to distributors has risen to 25,000 rupiah per kilogram in early June, compared with 20,000 rupiah per kg last December - a S$0.47 difference - he now not only breaks even but also reaps a profit of between 5 per cent and 10 per cent, similar to what he earned two years ago.
This comes on the back of people's improved purchasing power as Indonesia's economy recovered after Covid-19 restrictions were eased, and a higher demand for eggs.
"The new equilibrium is good for poultry farmers and does not burden consumers," Mr Suwardi, who goes by one name, told The Straits Times.
In comparison, he highlighted that the price of chilli, a key ingredient in Indonesian cuisine, has gone up from 35,000 rupiah per kg to as high as 100,000 rupiah per kg.
"Actually, we are willing to sell eggs at 20,000 rupiah per kg, but the government must ensure the availability of the poultry feed at an affordable level instead of letting it be under a free market," said Suwardi, whose farm yields about 300kg of eggs daily.
Poultry feed is the main cost in layer poultry farming. Its cost has soared as the supply of ingredients such as wheat, corn and soya bean has been impacted by the Ukraine-Russia war, as well as export restrictions by a few countries.
Inevitably, the rising costs of egg and poultry farming have been passed down to consumers, who are already contending with more expensive staples such as shallots and chilli.
In Jakarta, the price of chicken eggs in traditional markets shot up by 30 per cent to 30,000 rupiah per kg this week alone. A similar increase has also occurred in Bogor and Bekasi, West Java, according to food stall owners.
"Normally, the price declines after Lebaran," said Mukroni, who owns two cooked food stalls in Bekasi, referring to Hari Raya Aidilfitri. "What is happening now is an anomaly."
The chairman of the Association of Indonesian Traditional Food Stalls said that his fellow food stall owners are upset and trying to figure out what they can sell if the prices of raw ingredients continue to hike. He said he hopes the government will actively intervene to stabilise commodity prices.
Indonesia's consumer price index was up 3.55 per cent year-on-year in May, the highest in nearly five years, primarily driven by upticks in the prices of eggs, fish and shallots as well as air fare.
The food inflation was affected by the Russia-Ukraine war, which hampered food supply, and export bans on food commodities, such as wheat, beef, chicken, sugar and fertilisers, by a number of countries, according to Statistics Indonesia.
OCBC economist Wellian Wiranto wrote in a June 2 research note: "Indeed, there is a case to be made for paying more - not less - attention to these categories because these are the price changes that consumers experience most often and feel most forcefully.
"The more they pay for their daily necessities, the more they feel prices are higher, notwithstanding what the traditional inflation statistics might say."
Industry players indicate that the upward trend in food prices is imminent.
Adhi Lukman, chairman of the Indonesian Food and Beverages Producers Association, said that some manufacturers intend to raise selling prices soon due to multiple factors, including the rising prices of imported raw materials and logistics.
He noted that higher prices of eggs, a key ingredient for producing noodles and biscuits, and ingredients such as wheat, soya bean, corn, sugar, flavouring and preservatives are a major driver to more expensive production costs.
"The food and beverage industry may increase prices by around 5 per cent, which is already high for consumers," he said.
Noting the price-sensitive nature of processed food, he added: "If the increase is too high, the worry is that it will affect sales."
Indonesian Poultry Farmer Association spokesman Musbar Mesdi said egg prices will stabilise soon as supply will grow in line with the new selling prices.
He said there is a current supply shortage as many poultry farms had sold their chickens over the past two years during the pandemic, due to weak demand for eggs and chicken and the high price of feed.
"Demand is now higher, but the supply is lacking. But the supply will likely match the demand within one month," he said.
