Widodo Setiohadi, 59, a laying hen farmer in Pohgajih village, Selorejo district, Blitar regency, East Java, Thursday (8/6), feeds his laying hens. Chicken farmers in Blitar now face two problems, which are the low selling price of eggs and high price of corn feed. At the moment, the price of eggs at the farmer level is only Rp 13,500 per kilogram, while the price of corn is Rp 4,700 per kg.
This year’s Idul Fitri holiday is two weeks away but it is far from the minds of chicken farmers in in Blitar and Malang, East Java. Let alone buying new clothes for their children or cakes for the Idul Fitri festivities, just keeping their businesses afloat is difficult enough.
The cloud hovering over Pohgajih village, Selorejo sub-district, Blitar regency, East Java, on Thursday (8/6), added to the misery of the local chicken breeders including Widodo Setiohadi, 59, Joko Lelono, 42, and two other chicken farmers. That morning, they got the news that the eggs were selling for only Rp 13,500 (about US$1) per kilogram (kg).
The price is far below the reference price of Rp 18,000 per kg set under Trade Minister’s regulation No. 27 of 2017. Two weeks ago, they were relieved to find out that prices, which had plunged at the beginning of the year, rose to Rp 18,000 per kg at the farmer level. However, the excitement did not last long because the price fell back just before the Idul Fitri, or Lebaran, when the prices of eggs usually rise sharply.
"The price is now only Rp 13,500 per kg, far from enough to pay for vitamins for the chicken, electricity or to pay workers," Widodo said.
Widodo has 3,000 chickens that can produce 1 ton of eggs per week. If the eggs were sold at the current price, the revenue would be only about Rp 13.5 million. The spending for feed alone amounts to Rp 14.1 million per week.
At this time the price of corn on the market is Rp 4,700 per kg.
He does not know how to find the extra money to pay workers and buy the feed for the chickens. Reducing feed is clearly not possible because it will affect productivity. Chickens that have been sick find it hard to recover. Selling some chickens to buy feed is also not a wise choice.
It was a dilemma, said Joko Lelono, another chicken farmer in Blitar. He intends to sell his own eggs from village to village. However, that is not an easy job. It will consume a lot of energy because he should be able to sell 700 kg of eggs from 2,000 chickens per week.
Losing a job
The fate of workers is no better than that of the chicken farmers. Some of them will have to lose their jobs, like the workers at Joko\'s farm. One of two workers has been dismissed in the past two months.
Joko plans to sell his farm because he is no longer able to support his business. "Maybe, after Lebaran, I will work in Sumatra," said Joko.
The difficulty in running a poultry business is also experienced by Hariono, 32, one of the farmers in Tlogosari village, Donomulyo District, Malang regency. He has been trapped in debt to loan sharks since egg prices plummeted a few months ago.
He borrowed Rp 10 million on the condition of returning Rp 12 million within a month. Borrowing from loan sharks was the only option for Hariono because he can no longer borrow from the bank because he already had debts.
The plight of Widodo, Joko, and Hariono is relatively better than that of chicken farmers in Blitar and Malang, who amount to more than 4,200 people.
The director general of animal husbandry and animal health at the Agriculture Ministry, Ketut Diarmita, said Blitar served as the barometer of the Indonesian egg industry.
As much as 80 percent of the country’s egg production comes from the city. The population of laying hens in the area, based on data from Blitar regency, reached about 15 million chickens. Egg production averages 400 tons per day.
High disparity
The fluctuation in the prices of chicken eggs has put the farmers in difficult situation. Ironically, the price of eggs at the farmer level is far lower than those in traditional and modern markets. The price difference can reach at least Rp 4,500 per kg.
In Selopuro Market, one of the traditional markets in Blitar regency, the selling price of eggs is Rp 18,000 per kg. In fact, the market is located within the Blitar regency, where most chicken farmers are located.
Ami, 54, a retail trader at the market, said the price of eggs had dropped by Rp 1,000 per kg from the start of the fasting month to only Rp 19,000 per kg.
Ami buys the eggs from a middleman in Wlingi, Blitar, for Rp 16,500 per kg. "I sell for Rp 18,000 per kg," said Ami.
Kompas traced a price disparity amounting to Rp 4,500 per kg. Ahmad Alizain Shodiq, 44, a big chicken farmer in Jatitengah village, Selopuro district, who also acts as a middleman, explained that the high price disparity was caused by many factors.
According to him, the price disparity was high because traders in the market sold their egg stocks when the price at the farmer level was Rp 15,000 (four days earlier).
Another possibility, he said, was the price at the middleman (collector) level was high because the traders in the market paid for the eggs with loans that are usually more expensive than using cash. It can also be caused by a long supply chain. Ahmad Alizain, who has 55,000 chickens and has been involved in the poultry business for 21 years, said the egg prices were determined by the market in Jakarta.
Ahmad used to sell chicken eggs to distributors in Jakarta and other districts in East Java, such as Probolinggo. He sells between 10 tons and 15 tons of eggs per day. But in the middle of the fasting month, he only sells 5 tons.
In the warehouse, there are still 25 tons of eggs waiting for delivery. "I buy them from farmers at Rp 13,500 per kg and sell again to the Jakarta market Rp 14,900 per kg. They are willing to buy at Rp 14,900 per kg from me. There is a margin of Rp 1,400 for transportation costs, volume shrinkage, broken, and labor. As for some markets in East Java, the margin is lower, only Rp 600 per kg," he said.
Contacted separately, the head of the Livestock Office of Blitar regency, Mashudi, said he and Ketut Diarmita would meet with various related parties to find a solution.
Ketut said, the dynamics of egg prices were a result of excess supply and the middlemen. Therefore, the government had tightened supervision. The government’s efforts to maintain the stability of demand and supply continued in both the upstream and downstream. The high disparity has caused many problems. “It is a dilemma. If the prices are low, the breeders can die, while if the prices are high, the consumers will suffer.”
