The feedlot sector accounts for approximately 10% of total beef production in Indonesia. It is a potential contributor to meeting Indonesia’s beef self-sufficiency target, as well as a competitor for the smallholder cattle producers.
In May 2019, an IndoBeef market chains team comprising Christie Chang and Febrina Prameswari visited two feedlots in Cianjur, West Java. These included PT Ben Buana Sejahtera and PT Pasir Tengah.
The objectives of the visits were to understand the market chains, operations, and the issues and opportunities faced by these two feedlots, and to understand implications for smallholders. The results of the interviews are summarised below.
PT Ben Buana Sejahtera
This feedlot and cattle trading company was first established in 2013 and Pak Wahyu (the interviewee on this visit) became a partner of the company in 2015. Its business strategy changed in 2017 from the usual 3-4 months fattening period to short-term fattening to allow quick turnover of capital. This includes approximately 30 days for medium-sized cattle weighing 400-500kg, and a maximum of 70 days for feeder cattle weighing 350-400kg.
The feedlot primarily sources cattle from five local importers, and once fattened are sold to one of three different abattoirs. In addition to Australian cattle, PT Ben Buana Sejahtera will also source local cattle from traders in East and Central Java, especially during Idul Adha.
Demand for cattle increases significantly during Idul Adha, from approximately 30 head per day throughout the year in Cianjur to approximately 1,000 head for Idul Adha.
Customers prefer Brahman cattle because they are leaner, have a smaller frame, and a tougher meat, suitable to local cuisine.
Opportunities for the feedlot to grow include having a number of regular customers, and a gradual switch from cheaper frozen Indian buffalo meat back to fresh beef due to positive views of its quality.
PT Pasir Tengah
The PT Pasir Tengah feedlot facility was established by Widodo Maksur Perkasa, growing from a 4,000 head initial capacity in 2006 to approximately 30,000 head capacity in 2019. Demand from the facility is highest around the time immediately before Ramadan, and during Idul Fitri and Idul Adha.
Usually PT Pasir Tengah imports 60-70,000 head of cattle each year, but this could be much lower in 2019 due to a slowdown in demand, as well as floods in northern Queensland and prolonged Australian drought having reduced import supply.
The company has its own abattoir, which has a capacity of 300 head per day. Currently they only slaughter 70-100 head/day, which are sent to supermarkets as branded beef.
Pure Brahman cattle are preferred as they are in greater demand in the local market. It operates a breeding operation to comply with government policy, however at the time of the visit this program was not showing a profit.
Issues and implications
Both feedlot operations face significant market competition from imported Indian buffalo meat, which has resulted in either down-scaling or closure of some feedlots in Indonesia. demand has also been affected in recent times by an economic downturn.
Manure is cleared away regularly by the two feedlot operators, but stored on site and made available to farmers free of charge. This is significant for the CropCow project’s market chain research activities in Lombok, as one planned study was to explore the potential for smallholder farmers to sell manure by-product as compost. However if there is no viable market for this by-product for feedlots, it may be difficult for smallholders to sell it as well.
Government policy regarding frozen beef and live cattle imports has a notable impact on feedlot operators as well as smallholder producers. Since 2016, the government has applied regulations to feedlot companies to import feeder cattle and female breeding stocks at a ratio of 5:1 within every period of feedlotting (Permentan No. 02/Permentan/ PK 440/2/2017), as well as allowing frozen meats to be imported into Indonesia from Foot and Mouth Disease (FMD)-free zones of countries that are not FMD-free.
Further research will be conducted by the team in an attempt to quantify and further understand this impact.