Indonesian feed millers expect their output to rise by about 7-8 percent this year due to increased demand from the poultry and aquaculture sectors, industry officials said.
Mills are expected to use around 60 percent of their capacity this year compared with about 50 percent now and 40 percent in previous years, said Thomas Bauer, head of Asia food and agribusiness research at Rabobank.
Indonesia's feed output was 7.6 million tonnes last year, while installed capacity is around 15 million tones, Firman Gunadi, secretary general of the Indonesian Feedmillers Association, told Reuters late on Tuesday.
"The situation now is more difficult after the fuel price hike. We are expecting people to consume cheaper animal protein sources like chicken, not beef or fish," said Gunadi.
Chicken sales were up 6 percent in the first six months from a year ago to 520,000 tonnes, while egg sales also increased 2.8 percent from a year earlier to 430,000 tonnes, said Hartono, head of the poultry marketing information centre.
About 85 percent of Indonesia's feed output is absorbed by the poultry industry.
Gunadi said soybean meal imports are likely to rise to 2-2.5 million tonnes this year from 1.9 million last year. Soybean meal accounts for about 20 percent of raw material for feed production.
Indonesia does not produce soybean meal and imports this for domestic use.
While soybean meal imports are seen rising, the feedmillers association has projected corn imports are likely to fall to less than 400,000 tonnes in 2008 due to higher domestic output.
In 2007, Southeast Asia's biggest economy imported 700,000 tonnes of corn, down from 1.6 million tonnes in 2006.
Indonesia's biggest integrated poultry firm, PT Charoen Pokphand Indonesia Tbk CPIN.JK, also expects feed output to rise about 10 percent this year and its utilisation rate to improve to 60 percent this year.
"There is growth in industry volume, and of course price. It does not matter that the price of raw materials has gone up (early this year)," said Thomas Effendy, Charoen's vice president.
Another integrated poultry firm, PT Sierad Produce Tbk SIPD.JK, also expects overall output to increase, notching up sales revenue of 2.0 trillion rupiah ($215.2 million) this year compared with 1.6 trillion in 2007. ($1 = 9,294 rupiah)