The reference price for eggs and meat for purebred chickens has increased by an average of IDR 3,000 per kilogram

Price relaxation was carried out based on farmer proposals regarding increases in production inputs which changed the production cost structure.

KOMPAS/REGINA RUKMORINI

Chicken prices are stable at IDR 37,000-IDR 40,000 per kg. This makes many buyers reduce their purchasing volume.

JAKARTA, KOMPAS — The government raised reference prices for eggs and chicken meat breeds both at the producer and consumer level as of Thursday (25/4/ 2024) from the previous price set since 2022. This price relaxation is a relief for producers who have been hit by rising production costs. On the other hand, there is a threat of decreasing consumer purchasing power due to the upward trend food prices.

The government through the National Food Agency (Bapanas) released a list of relaxation of purchasing reference prices (HAP) at the producer level and sales reference prices (HAP) at the consumer level for commodities chicken eggs purebred chickens and meat. This regulation changes the reference price stipulated in the National Food Agency (Perbadan) Regulation Number 5 of 2022.

In detail, at the producer level, the cost of producing chicken eggs has increased from IDR 22,000-24,000 per kilogram to IDR 26,000 per kilogram. The cost of producing broiler chicken has also increased from IDR 21,000-23,000 per kilogram to IDR 25,000 per kilogram. Meanwhile, at the consumer level, the cost of chicken eggs has increased by IDR 3,000 from IDR 27,000 per kilogram to IDR 30,000 per kilogram. The cost of broiler chicken meat has increased by IDR 3,250 from IDR 36,750 to IDR 40,000 per kilogram.

Head of Bapanas Arief Prasetyo Adi stated that this price relaxation was carried out after considering proposals from chicken and egg business actors related to the increase in production input that changes the cost structure of production. "As well as following up on the results of coordinating meetings to review the Purchase Reference Price at the Producer Level and the Sales Reference Price at the Consumer Level of Corn, Layer Chicken Eggs, and Broiler Chicken Meat," he said in a letter quoted on Friday (26/4/2024).

This price change will only apply temporarily from April 25, 2024, until May 31, 2024. So far, the price of broiler chicken in all provinces is still below the new reference price.

Quoting the Hot Commodity Prices Panel, as of Friday (26/4/2024), the price of broiler chickens at the producer level in the past week remains high at Rp 23,450 per kg. Meanwhile, the price of broiler eggs has also exceeded the previous retail price ceiling of Rp 25,270 per kg today.

As for the price of chicken meat at the retail level, it continues to decline from an average of IDR 38,870 per kg on April 19, 2024 to IDR 38,380 per kg on April 26, 2024. However, today's price reverses the downward trend as it has increased by almost 1 percent from the previous day.

A similar pattern also occurs in the trend of chicken egg prices. The price per kg of eggs on April 19, 2024 reached Rp 30,520, then on April 23, 2024, it briefly dropped to Rp 30,020. After that day, the price rose again to reach Rp 30,700 today, April 26, 2024.

To ensure the implementation of this commodity reference price adjustment, Arief hopes for cooperation from the Food Task Force of the Police to periodically monitor, both at the producer and consumer levels.

Also read: Bapanas is currently calculating reasonable prices for grain, rice, corn and sugar

Reasonable increase

For producers, the reference price increase is considered reasonable even though the adjustment is late.

President of the Indonesian Layer Farmer Association, Musbar Mesdi, stated that according to the law, the reference price should be evaluated every three to four months. However, Regulation No. 5/2022, issued in September 2022, was used for a long time even though in 2023 there was a global economic and political crisis that affected livestock production costs, especially feed costs which contributed to 74 percent of production costs.

"What is really felt is the prices of imported feed raw materials, especially those from soybeans and their derivatives. In addition, the price of our local corn has increased because domestic production has failed to harvest. "All of this has increased the price of manufactured feed by 26 percent since Perbadanan No. 5/2022 was issued," he said when contacted by Kompas.

ADRYAN YOGA PARAMADWYA

Several free-range chickens at a chicken farm in Parigi area, Pondok Aren, South Tangerang, on Thursday (13/10/2022). Home-based egg farmers are complaining about the egg prices that do not match the cost of feed. This forces them to sell their chickens to cover losses.

The increase in production costs at the farmer level, which is the upstream industry, cannot be avoided anymore due to the current global economic crisis that greatly affects the condition of the domestic food industry. Moreover, the value of the US dollar continues to strengthen, causing the rupiah to plummet to Rp 16,000 per US dollar. Bank Indonesia has recently issued a policy to raise interest rates which can be transmitted into an increase in business capital debt.

Adjustment downstream also becomes important as upstream production factor interventions are difficult to realize quickly. Production factors upstream, among others, include increasing corn production that prioritizes domestic production. "Corn production is problematic because the productivity per hectare is declining due to fertilizers scarcity resulting in corn cobs not coming out," he said.

The national livestock industry's corn demand is in the range of 750,000-800,000 tons per month. The availability of domestic corn must always be maintained in the form of government corn reserves (CJP) because it has a significant impact on animal feed costs. Meanwhile, according to Musbar, the availability of corn competes with the availability of rice.

"The area for corn and rice cultivation is the same, and usually there are two planting seasons per year for technically irrigated land areas. That's why the Ministry of Agriculture is now focusing on planting in non-irrigated fields," he said.

KOMPAS/RONY ARIYANTO NUGROHO

Sulistyowati (23) harvested corn on a corn plantation in Poto Tano, West Sumbawa, West Nusa Tenggara, on Sunday (28/4/2019). This corn harvest has sharply decreased, from the usual 25 tons to only 10 tons.

People's purchasing power

As important staple foods, it is feared that the increase in the price of chicken meat and eggs will further reduce people's purchasing power.

Director of the Center of Economics and Law Studies (Celios), Bhima Yudhistira, who was contacted separately, assessed that the community is not yet ready for a significant increase in prices. Especially since the availability of money is declining after Idul Fitri, plus an increase in needs ahead of the school promotion season or education costs.

"Moreover, with the current increase in interest rates and the weakening of the rupiah, it will impact the middle-class community who are not entitled to social assistance, while their basic needs cannot be adequately fulfilled. This could also impact the less fortunate communities as the distribution of social aid has decreased," he said.

Also read: Food Prices After Eid

According to Bhima, the increase in food prices may lead people to look for alternative sources of cheaper protein, such as tofu and tempeh. Another option is to continue spending more money to buy chicken and eggs, but then reducing spending for other needs.

"Consumers can reduce their spending on other needs, such as secondary needs. The impact will be felt by other businesses, which may see a decrease in sales turnover," he added.

Instead of sacrificing the community, he believes that the government is better off optimizing handling upstream, including by providing subsidies for corn fertilizer, innovating to produce corn seed that is resistant to extreme weather, and preventing land conversion in central corn production.