Tightening Chicken Import Requirements

The entry of Brazilian chicken meat will not be a big problem if done not close to the recent decline in chicken prices. Moreover, the current chicken supply has exceeded demand (oversupply).

Economist at the University of Indonesia Fithra Faisal said the oversupply led to the chicken price decline in the middle of this year. If added with imported chicken meat, the price will surely drop again.

Consumers would benefit more. In terms of market share, however, they may not be interested in Brazilian chicken meat, which is mostly sold frozen.

Indonesian people prefer freshly cut meat. About 90 percent of local farmers provide fresh chicken. “This import should not have a big effect as it has a different market,” he told Katadata.co.id.

So far, the amount of chicken imports is also not significant because of sufficient domestic supply. Based on the Databoks chart below, chicken imports (buras/other than broiler and leghorn chickens) only reached 76.5 thousand kg in 2018.

Thus, this import is not required, but Indonesia as a member of the WTO is inevitably subject to the organization’s decisions. “If we continue to refuse, we will be subject to retaliation,” he said.

Retaliation is a countermeasure. Brazil could do such a thing, which will undoubtedly hamper the government's plan to open non-traditional export markets, including to Latin American countries.

Institute for Development of Economics and Finance (INDEF) Researcher Rusli Abdullah said local broiler chickens could not compete with Brazilian chickens because their production costs are cheaper than in Indonesia.

Rusli cited the US Ministry of Agriculture data for 2018, saying the cost of live chickens in Brazil reached Rp 9,400 per kg. Meanwhile, as of today, the price of local chicken meat in Indonesia reached Rp 37,000 per kg.

The comparison is indeed between live and dead chickens (meat). The difference may reach up to three times when comparing chicken meat from the two countries. Brazil remains cheaper.

This condition is not worrying, as long as the government wants to take advantage of the gap. Rusli said Indonesia needed to set a non-tariff barrier for chicken imports.

This rule is similar to what the Chinese government did with Indonesian mangosteen products. The requirements are stringent. It even regulates the fruit skin shape and the fruit flesh color. Besides, of course, it must be free from viruses and diseases.

The government can do the same for Brazilian chickens. “In addition to the matter of sanitation and halal certification, product specifications can be hardened,” Rusli said.

In order not to prevent it from shutting down the business of independent farmers or MSMEs (micro, small, and medium enterprises), the market share of imported Brazilian chickens needs to be directed. According to Rusli, Brazilian chicken is more suitable to enter the processed food industry, such as nuggets and sausages.

If successful in doing that, the government has a chance to increase exports of processed foods. “I think the government must team up with entrepreneurs,” he said. With this way, hopefully, no MSMEs or chicken farmers go out of business.