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.
Areas for further research
Several important issues were identified from the very brief, but useful, visits to the feedlots. These issues are common to both the feedlotters and smallholders, and warrant further investigation. They include:
What are consumer preferences for different cattle breeds?
What is the relative cost competitiveness of the feedlotters and smallholders?
How demand for, and supply of, locally produced beef has been affected by market forces and the policy environment in recent times?
How cattle manure can be better managed (e.g. through composting and marketing as organic fertiliser) to improve incomes and profitability for cattle producers, as well as environmental outcomes for both the cattle and farming communities?