According to local media reports, the move is in line with its expansion strategy in Indonesia.
Farmsco is reportedly injecting around 60 billion won (US$52.9m) in its Indonesian operations.
Under the deal with Sujaya, Farmsco gets a renovated feed plant; an upgrade to that facility was completed in 2014; the plant is said to have annual feed production capacity of 500,000 tons.
Indonesia feed market data
Indonesia has 18.3m metric tons of feed production and 92 feed mills in total, according to data from the 2017 Alltech global feed survey.
Some 49 of those feed mills are located on Java, noted the US Department of Agriculture (USDA) in a review of the feed and grain market developments in Indonesia in July this year.
The USDA report noted how the Indonesian Feed Producers Association (Asosiasi Produsen Pakan Indonesia, APPI) had committed to prioritize domestic corn purchases over imports in support of the Indonesian Ministry of Agriculture’s (MOA) self-sufficiency goals on corn; corn accounts for 50% of feed formulations and 35% of poultry feed production costs there.
The MOA has targeted zero corn imports for MY 2016/17, and is encouraging mills to use local corn to meet feed milling needs, said the USDA.
APPI said that expensive domestic corn prices cannot be passed on to consumers, thus reducing feed mills’ margins, and that factor, combined with a general economic slowdown, is expected to continue to slow commercial poultry feed consumption growth.
The poultry industry consumes around 83% of Indonesia’s animal feed. Aquaculture consumes 11% and the remaining 6% is consumed by cattle and swine, according to USDA data.
The USDA, citing Indonesian poultry industry forecast data, said the MY2016/17 poultry population will reach 3.5 billion broilers, 200 million layers, and 24.8 million breeders.
Slow down in aqua feed demand
Demand for aquaculture feed in MY 2016/17 is estimated to increase by 10%, slower growth than the 13% hike in MY2015/16; the reduction is said to be due to diseases affecting shrimp production.
Indonesian mills are running at 70 to 80% capacity, added the USDA.
However, a new wet mill producing corn starch in East Java has been operational since April 2017. Installed capacity of the new mill is 86,000 MT of corn starch per year, said the USDA.
The new mill will produce corn gluten meal (12,000 MT of installed capacity per year) and corn gluten feed (48,000 MT of installed capacity per year) in addition to starch, it added.
The facility uses imported corn as raw material.