Government intervenes amid oversupply and falling chicken prices

Indonesia's poultry market is currently facing an oversupply crisis, leading to a significant drop in live chicken prices. The Ministry of Agriculture has stepped in to mitigate the situation, aiming to stabilise prices and support local farmers.

Oversupply Crisis

The crisis has been attributed to an increase in domestic supply coupled with weak demand, causing live chicken prices to plummet in various regions. In Central Java, prices have fallen to as low as IDR15,000 (EUR/KG 0.79), which is significantly below the government's reference price of IDR19,500 (EUR/KG 0.93). This situation is creating financial strain for many producers, particularly independent and small-scale farmers, who are struggling to operate above the breakeven point.

Government Intervention

In response, the Ministry of Agriculture has implemented several measures. It has urged farmers not to sell their products below the government's benchmark price. Additionally, discussions have been held with the Indonesian Poultry Slaughterhouse Association (ARPHUIN) to ensure processors adhere to the agreed price when purchasing live birds. Despite these efforts, ARPHUIN maintains that the current pricing is a result of natural market forces.

Suspension of New Projects

To further address the oversupply, the Ministry has temporarily halted the issuance of state recommendations for new poultry projects. This move is intended to prevent exacerbating the oversupply situation and will remain in effect until market prices recover to the target levels set by the government. Industry leaders, such as Hari Suhada, have expressed support for this decision, acknowledging it as a commitment to aiding producers during these challenging times.

The Ministry's actions highlight the delicate balance required to maintain the sustainability of the poultry industry in Indonesia, particularly for smaller players who are more vulnerable to market fluctuations.

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