Indonesia’s poultry feed industry continues to provide the strongest earnings support for the country’s listed integrated poultry companies, demonstrating remarkable resilience despite ongoing volatility in global grain and oilseed prices.
According to Andreas Kristo Saragih, Senior Research Analyst at Mirae Asset Sekuritas Indonesia, feed manufacturing remains the most profitable business segment for the nation’s major poultry producers, significantly outperforming commercial broiler farming in terms of earnings contribution.
The assessment reinforces a long-standing characteristic of Indonesia’s poultry industry—while broiler production and day-old chick (DOC) sales are highly cyclical and vulnerable to fluctuations in live bird prices, feed operations provide comparatively stable and predictable cash flows.
Feed Business Drives Industry Earnings
Indonesia’s leading integrated poultry companies—including PT Charoen Pokphand Indonesia Tbk, PT Japfa Comfeed Indonesia Tbk, PT Malindo Feedmill Tbk, and PT Sierad Produce Tbk—derive a substantial share of their operating profits from feed manufacturing.
According to Saragih, commercial broiler farming typically contributes around 50% of total poultry production volumes, but feed operations remain the largest source of profitability because of stronger margins, higher production efficiency and relatively stable demand from both integrated and independent poultry growers.
“The feed segment continues to be the earnings backbone of Indonesia’s poultry industry,” Saragih noted, highlighting that integrated producers have been better positioned to manage volatility in raw material costs through procurement strategies and operational efficiencies.
Commodity Prices Continue to Shape Margins
Feed manufacturers continue to monitor international prices of key ingredients, particularly:
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Corn
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Soybean meal
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Wheat
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Feed wheat substitutes
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Vegetable oils
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Amino acids
Indonesia imports significant quantities of soybean meal and other feed ingredients, making the industry sensitive to movements in international commodity markets, freight costs and currency exchange rates.
Although global grain prices have moderated compared with the extreme levels experienced during recent supply chain disruptions, companies continue to operate in an environment where weather events, geopolitical developments and export policies can rapidly alter feed input costs.
Integrated producers have responded by strengthening procurement planning, diversifying sourcing strategies and optimizing feed formulations to maintain margins.
Integrated Business Model Offers Competitive Advantage
Indonesia’s largest poultry companies operate fully integrated business models covering:
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Feed manufacturing
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Grandparent and parent breeding
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Hatcheries
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Commercial broiler farming
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Processed poultry products
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Distribution
This integration enables companies to balance profitability across different business segments. Periods of weaker broiler prices often reduce farming margins, but feed operations typically continue generating stable earnings because commercial growers must purchase feed regardless of fluctuations in poultry prices.
Industry analysts note that this diversified revenue structure has become increasingly valuable during periods of market volatility.
Feed Demand Remains Structurally Strong
Indonesia’s expanding poultry sector continues to underpin long-term demand for compound feed. With a population exceeding 280 million and chicken remaining one of the country’s most affordable animal protein sources, poultry consumption continues to rise steadily.
Growth in modern retail, foodservice expansion and increasing urbanisation are expected to support sustained demand for broiler meat and eggs, creating corresponding demand for commercial feed.
Industry forecasts suggest compound feed production will continue expanding over the coming decade as poultry production becomes increasingly intensive.
Technology Improving Feed Efficiency
Feed manufacturers are also investing in nutritional innovation to improve production efficiency. Modern feed formulations increasingly incorporate:
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Feed enzymes
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Organic acids
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Probiotics
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Precision amino acid supplementation
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Mycotoxin management solutions
These technologies improve nutrient digestibility, reduce feed conversion ratios and help producers manage rising ingredient costs.
Precision nutrition has become particularly important as companies seek to maximise animal performance while maintaining competitive feed prices.
Currency Movements Remain a Key Variable
Beyond raw material prices, analysts continue to monitor movements in the Indonesian rupiah against the US dollar. Because many feed ingredients are imported and denominated in US dollars, currency depreciation can significantly increase production costs.
Large integrated companies have generally been better positioned to manage foreign exchange exposure through hedging strategies and procurement planning than smaller regional feed manufacturers.
Processing Business Continues to Expand
Although feed remains the principal profit engine, integrated poultry companies continue investing in downstream processing to diversify earnings. Expansion of:
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Further-processed chicken products
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Ready-to-cook offerings
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Value-added retail products
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Modern cold-chain distribution
