The tide is turning for the Indonesian poultry industry, which is coming out of a prolonged stress period. This shift in the sector will create new opportunities for both domestic and foreign companies, a recent Rabobank report concludes.
The poultry industry is set to recover from a depressed period of oversupply and sluggish demand, triggering leading companies to consider strategic options both this year and next, the report states.
One expected response is consolidation, especially among small and mid-sized players. New investment in expansion is another, because although feed remains the most lucrative part in the supply chain, the growth and margins in further processing also provide attractive investment opportunities.
Beyond these short-term dynamics, the Indonesian poultry industry’s mid-term outlook is positive too. Given poultry’s popularity in Indonesia and the lack of religious impediments for consumers, Rabobank expects annual growth at 4-5% through to 2020. This helps make Indonesia attractive to international investors.
In the long run, Indonesia could also become an alternative sourcing base for global poultry importers—especially from Japan and the EU for cooked processed products—however investment in the export system and efficiency improvements will be needed to realise this potential.