Grainnet

USGC: Indonesia Could Provide Great Market for DDGS, But First Must Overcome Lack of Purchasing Power and Animal Health Issues

This article is reprinted from the U.S. Grains Council August 29 Global Update

Indonesia is a country with great potential as a market for U.S. feed grains and distiller’s dried grains with solubles (DDGS), but first it must overcome a number of challenges, according to members of the U.S. Grains Council’s 2008 Corn Mission.

Mission members spent several days touring Indonesia’s agricultural base and seeing firsthand the work the Council is doing in the market.

“Indonesia is still an emerging market, with great sea port shipping opportunities,” said mission member Bill Christ of the Illinois Corn Marketing Board.

“The potential market growth is limited only by their desire to grow.”

The key challenges facing Indonesia are a lack of disposable income in the population and recurring animal health issues, such as battles with avian influenza.

The lack of purchasing power in the country means a lack of demand for meat production, which in turn limits the need for efforts to expand poultry development.

Council programming in the country has focused on the needs, constraints and opportunities in several areas, including grain handling and storage infrastructure, grain quality and inventory management, feeding demonstrations and grain buyer education.

“The Council’s information is considered valuable because it is independent, it can be backed up scientifically, and since we are not selling anything, there is a higher level of credibility,” said Mark Garber of the South Dakota Corn Utilization Council.

With an estimated 30 percent of the population living below the poverty level, cheaper feed ingredients are often purchased first.

“The one thing we heard in our travels across Asia is the high quality of U.S. corn and DDGS,” said Mike Richardson, of the Arkansas Corn and Grain Sorghum Board.

“However, a lot of the purchasing decisions in Indonesia are made based on price and the United States has serious competition on that side from India and other markets.”

In highlighting other challenges, Dave Neilson of the Nebraska Corn Board said, “The potential for a larger market share for U.S. products is definitely there, but there may be additional challenges due to the economic, political and religious landscape of Indonesia.”

Mission participants are: Dave Nielsen of the Nebraska Corn Board; William Christ of the Illinois Corn Marketing Board; Keith Finney of the North Dakota Corn Utilization Council; Kevin Rempp of the Iowa Corn Promotion Board; Robert Garber of the South Dakota Corn Utilization Council; and Mike Richardson of the Arkansas Corn and Grain Sorghum Board.

Mike Callahan, USGC director of international operations — Asia, and Shannon Schaffer, USGC director of membership are accompanied the team along with overseas staff in the markets visited.