Indonesia Agribusiness Report

Providing expert analysis, independent forecasts and competitive intelligence on the agribusiness industry.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, Supply & Demand Forecasts, Commodity Price Analysis and Company Profiles.

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Indonesia Agribusiness Report
Product Price
$1,295.00

BMI View: We hold an optimistic outlook towards Indonesia's agriculture sector and see significant growth opportunities in sub-sectors such as livestock, sugar and palm oil. Th e country's goal to become self- sufficient in a large number of commodities is overly ambitious in light of the robust outlook for food and drink consumption. Agricultural production will struggle to expand in the coming years amidst scarce agricultural land, the lack of proper infrastructure and the existence of a large number of low-technology, small-scale farmers. While we believe that Indonesia will be able to reduce its dependence on rice imports in the coming years, sugar, corn and beef self-sufficiency are far-fetched.

Self-Sufficiency Goal Not Always Achievable
Indonesia - Select Commodities Self-Sufficiency Ratios (%)
f = BMI forecast. Source: USDA, FAPRI, FAO, BMI

BMI Key Forecasts

  • Cocoa production growth between 2014/15 and 2019/20: 13.4% to 368,000 tonnes. Production growth will slightly accelerate from 2018 onwards, as private grinders are slowly developing programmes to improve plantation management and foster best practices. Until then output will see weak growth.

  • Palm oil consumption growth between 2015 and 2020: 40.9% to 11.8mn tonnes. Relatively recent refining and biodiesel policies (B15 mandate) will continue to inflate domestic consumption of palm oil in the coming years.

  • Sugar production growth between 2014/15 and 2019/20: 36.4% to 2.9mn tonnes. The strong growth rate is mainly due to base effects as production declined in 2014/15. Moderate expansion in plantations will help output grow in the coming years, but production growth will be held back by poor cane recovery rates, harvest management and infrastructure issues.

  • BMI universe agribusiness market value: USD140.84bn in 2016 (up from USD129.32bn in 2015; forecast to grow annually by 6.8% on average between 2016 and 2020).

  • 2016 real GDP growth: 5.2%, up from 4.8% in 2015 and compared with the 2011-2015 year average growth of 5.2%; forecast to grow annually by 5.9% on average between 2016 and 2020.

  • 2016 consumer price index: 4.2%, down from 5.9% in 2015 and compared with the 2011-2015 year average growth of 6.0%; forecast to grow annually by 4.8% on average between 2016 and 2020.

Latest Updates & Structural Trends

  • As the rice harvest is now in full swing, we have revised downward our forecast for Indonesia's 2015/16 rice production and now expect output to decline by 1.0% y-o-y to 35.2mn tonnes. Our downward revision is due to the lasting impact of El Nino, which delayed plantings in Q415 and negatively impacted yields in Q116. If the weather phenomenon were to remain strong over the second half of H116, it could also impact later rice crops.

  • We have revised downward our forecast for 2015/16 corn production as the harvest of the main (rain-fed) crop is now ongoing. The current El Nino has impacted the crop through below-average rainfall at times of planting in Q415 and during the growing phase in Q116. We now expect the 2015/16 corn crop to remain flat y-o-y at 9.0mn tonnes. The government has put in place measures to mitigate the impact of the current dry weather, through the rehabilitation of irrigation channels, building of new reservoirs and wells and distribution of water pumps to affected farmers. However, we see downside risks to this view, as El Nino could remain strong until the end of H116 and affect the smaller corn crop for which plantings are about to begin.

  • Along with some Southern African and Asian countries, El Nino has hit Indonesia hard since the second half of 2015 and will negatively impact palm oil production in 2015/16. El Nino is proving to be stronger than anticipated, and drove two waves of dry weather, one in August-October 2015 and one that started in January 2016 and that is still ongoing. We have revised down our production forecasts for both Indonesia and Malaysia in 2015/16. Indonesia's output (down 0.1% y-o-y to 32.9mn tonnes) will decrease by a lesser extent than Malaysia's (down 1.9% y-o-y to 19.5mn tonnes) as Indonesian plantations are still expanding and have a younger tree-age profile, meaning trees will be more resistant to water stress.

  • The forest fires and haze crisis that unfolded in South East Asia in H215 - caused by the slash and burn technique and exacerbated by El Nino and the dry weather it brought to the region - will impact Indonesia and Malaysia's palm oil sectors in the coming years. The looming implementation of stricter sustainability laws for the palm oil sector adds to other mounting challenges for the sector. The haze turned the spotlight on Indonesia's already controversial palm oil sector and environmental sustainability practices and will have a negative impact on future production and consumption trends.

  • The operating environment for palm oil companies in Indonesia will remain challenging over the coming quarters. In light of the downturn in the sector, palm oil companies are adjusting their strategies towards much-needed efficiency gains. Companies will also look at acquiring small and young plantations, leading to consolidation in the sector, as well as in the oleochemical segment.

  • On another note, regarding environmental laws and the global fight against climate change, the UN 2015 Paris Climate Change Conference (UN COP21) agreement, signed in December 2015, will have some impacts for Indonesia's palm oil sector. Deforestation will be one of the first issues to be addressed by the fight against climate change. On this front, Indonesia, which is a significant emitter in land-use change and forestry, will be one of the most impacted countries. It will see growing scrutiny and stricter regulations in the palm oil sector regarding future plantation expansion.

  • Indonesia's long-standing goal to reach self-sufficiency for a number of key foodstuffs will remain elusive in the coming years as production expansion is constrained by structural deficiencies. As such, the government will have little choice but to ease the import restrictions it maintains on corn and sugar, gradually allowing more imports in the coming years.

BMI Industry View
7
SWOT
10
Agribusiness
10
Industry Forecast
12
Rice Outlook
12
Table: Indonesia - Rice Production & Consumption Outlook
12
Table: Risks To Outlook
13
Table: Rice Production & Consumption (Indonesia 2013-2020)
16
Table: Rice Production & Consumption (Indonesia 2011-2019)
16
Grains Outlook
17
Table: Indonesia - Grains Production & Consumption Outlook
17
Table: Risks To Outlook
18
Table: Grains Production & Consumption (Indonesia, 2013-2020)
22
Sugar Outlook
23
Table: Indonesia - Sugar Production And Consumption Outlook
23
Table: Risks To Outlook
24
Table: Sugar Production & Consumption (Indonesia 2013-2020)
30
Livestock Outlook
31
Table: Indonesia - Livestock Production & Consumption Outlook
32
Table: Risks To Outlook
32
Table: Livestock Production & Consumption (Indonesia 2013-2020)
36
Coffee Outlook
37
Table: Indonesia - Coffee Production & Consumption Outlook
37
Table: Risks To Outlook
38
Table: Coffee Production & Consumption (Indonesia 2013-2020)
42
Cocoa Outlook
43
Table: Indonesia - Cocoa Production & Consumption Outlook
43
Table: Risk To Outlook
44
Table: Cocoa Production & Consumption (Indonesia 2013-2020)
48
Palm Oil Outlook
49
Table: Indonesia - Palm Oil Production & Consumption Outlook
50
Table: Indonesia - Risks To Palm Oil Outlook
50
Table: Indonesia - Minimum Wage ('000 IDR) & Palm Oil Production By Province, 2012-2016
55
Table: Palm Oil Production & Consumption (Indonesia 2013-2020)
59
Table: Palm Oil Production & Consumption (Indonesia 2011-2019)
59
Commodities Price Analysis
60
Global Commodities Strategy
60
Table: Select Commodities - Performance And BMI Forecasts
60
Upstream Analysis
62
Asia Machinery Outlook
62
Table: Select Countries - Average Size Of Farms, Hectares
65
Asia GM Outlook
67
Table: Selected Countries - GM Crops Use (mn hectares)
70
Asia Fertiliser Outlook
71
Downstream Analysis
76
Food
76
Table: Food Consumption Indicators - Historical Data & Forecasts (Indonesia 2012-2019)
78
Canned Food
78
Confectionery
79
Table: Confectionery Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Indonesia 2012-2019)
80
Regional Overview
82
Table: Impact Of El Ni-o On Crops
82
Competitive Landscape
87
Table: Major Agribusiness Companies
87
Demographic Forecast
88
Demographic Outlook
88
Table: Population Headline Indicators (Indonesia 1990-2025)
89
Table: Key Population Ratios (Indonesia 1990-2025)
89
Table: Urban/Rural Population & Life Expectancy (Indonesia 1990-2025)
90
Table: Population By Age Group (Indonesia 1990-2025)
90
Table: Population By Age Group % (Indonesia 1990-2025)
91
Methodology
93
Industry Forecast Methodology
93
Sector-Specific Methodology
94

The Indonesia Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.

BMI's Indonesia Agribusiness Report includes independent commodity price forecasting and analysis for key agricultural outputs, an overview of the agribusiness competitive landscape and a discussion of the downstream context of agricultural production in relation to country food consumption forecasts and composite food and beverage trade forecasts.

Key Benefits

  • Use BMI's independent industry forecasts to test other views - a key input for successful planning in dynamic agribusiness markets.
  • Apply BMI's medium-term commodity price analysis to assist with budgetary planning and the identification of investment opportunities and potential risks.
  • Assess the activities and market position of your competitors, partners and clients.

Coverage

BMI Industry View

Summary of BMI’s key industry forecasts and views, highlighting recent changes and key risks to the industry outlook.

Industry SWOT Analysis

Analysis of the major strengths, weaknesses, opportunities and threats within the wider agricultural industry.

BMI Supply & Demand Forecasts

Divided into sections based on various diverse sectors in the agriculture market, the chapter provides insight into each market’s agricultural industry, centred on sector forecasts to end-2019 for the consumption, production and trade of key commodities.

  • Consumption Forecasts: Accompanied by a discussion of the main drivers of consumption growth: macroeconomic factors, food processing trends, price movements and increasingly, demand from the non-food sector.
  • Production Forecasts: Examine the trends influencing BMI’s production outlook: global demand, price increases, public and private sector investment and agricultural efficiency improvements.
  • Trade Forecasts: Accompanied by a discussion of the factors influencing a country’s trade in agricultural goods, including domestic demand, global prices and government trade policies.
  • BMI’s Forecasts: Accompanied by a risks-to-outlook assessment, which examines potential factors that could affect our existing forecast picture and the likelihood of their occurrence.

BMI’s Commodity Price Analysis

Fundamental and technical analysis of the short- and medium-term price outlook for eight agricultural commodities based on globally recognised benchmarks.

Downstream Analysis

Analysis of headline food and drink forecasts, including total food consumption, per capita food consumption and total sector trade, which provide important downstream intelligence for primary agricultural producers.

Featured Analysis

Includes relevant articles from BMI’s daily analysis service. These can include: long-term projections on agricultural imports and exports; our perceptions of the impacts of economic slowdown on key companies and subsectors within the Agribusiness industry in a given country; our analysis of fertilizer production; as well as other relevant analysis of recent news and events.

Competitive Landscape

The reports contain information on prominent companies operating in each market.

Key Commodities Covered By The Agribusiness Market

Reports Include: Grains, Dairy, Livestock, Rice, Sugar, Palm Oil, Edible Oils, Coffee, Cocoa, Cotton, Soybean

Please note – not all reports cover all commodities.

Sources

The Agribusiness reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.