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: Indonesia's agriculture holds a great amount of promise and sub-sectors such as livestock, sugar and palm oil will experience significant growth opportunities . However, t h 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, OECD-FAO, BMI

BMI Key Forecasts

  • Cocoa production growth between 2014/15 and 2019/20: 3.1% to 335,000 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: 33.8% to 11.2mn 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: 19.2% to 2.5mn tonnes. The strong growth rate is mainly due to base effects, as production declined in 2014/15. Moderate expansion in plantations, improved yields and higher sucrose content in cane will drive growth. However, it will be held back by poor cane recovery rates, harvest management and infrastructure issues.

  • BMI universe agribusiness market value: USD14 1.2 bn in 2016 (up from USD129.3bn 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 5.5%; forecast to grow annually by 5.8% 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

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.

El Nino hit Indonesia hard in 2015-2016 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-March 2016. We have revised down our production forecasts for both Indonesia and Malaysia in 2015/16. Indonesia's output will decrease by a lesser extent than Malaysia's as Indonesian plantations are still expanding and have a younger tree-age profile, meaning trees will be more resistant to water stress.

Indonesia's production will pick up strongly in 2016/17 due to the return of more normal yields. However, the slowdown in Indonesia's palm oil production growth recorded over the past five years - due to growing constraints to plantation expansion and low palm oil prices - will resume in the medium term.

The looming implementation of stricter sustainability laws for the palm oil sector adds to other mounting challenges. 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. Environmental and labour rights issues around palm oil production will continue to make the headlines in the coming months, putting increasing pressure on large producers to adopt more sustainable - and costly - practices. However, the implementation of stricter regulations (on deforestation for example) will take years to be developed as the Indonesian government is willing to protect smallholders, who represent 40% of the country's production.

We maintain our forecast for Indonesia's 2015/16 rice production to decline by 1.0% y-o-y to 35.2mn tonnes due to the lasting impact of El Nino, which delayed plantings in Q415 and negatively impacted yields in Q116. For 2016/17, we forecast rice production to recover and grow by 2.5% y-o-y to 36.1mn tonnes due to more favourable weather and higher yields.

We maintain our forecast for 2015/16 corn production at 9.0mn tonnes, flat y-o-y, as El Nino has impacted the crop through below-average rainfall during the planting season in Q415 and the growing phase in Q116. The increased use of subsidised hybrid corn seeds constitutes an upside risk to our production forecasts as yields could be stronger than we expect.

BMI Industry View
7
SWOT
10
Agribusiness
10
Industry Forecast
12
Rice Outlook
12
Latest Updates
12
Table: Indonesia - Rice Production And Consumption Outlook
12
Table: Risks To Outlook
13
Structural Trends
13
Table: Rice Production & Consumption (Indonesia 2012-2020)
16
Grains Outlook
17
Latest Updates
17
Table: Indonesia - Grains Production & Consumption Outlook
18
Table: Risks To Outlook
18
Structural Trends
18
Table: Grains Production & Consumption (Indonesia, 2012-2020)
22
Sugar Outlook
23
Latest Updates
23
Table: Indonesia - Sugar Production And Consumption Outlook
23
Table: Risks To Outlook
24
Structural Trends
24
Table: Sugar Production & Consumption (Indonesia 2012-2020)
27
Livestock Outlook
28
Latest Updates
28
Table: Indonesia - Livestock Production & Consumption Outlook
29
Table: Risks To Outlook
29
Structural Trends
29
Table: Livestock Production & Consumption (Indonesia 2012-2020)
34
Coffee Outlook
36
Latest Updates
36
Table: Indonesia - Coffee Production & Consumption Outlook
36
Table: Risks To Outlook
36
Structural Trends
37
Table: Coffee Production & Consumption (Indonesia 2012-2020)
40
Cocoa Outlook
41
Latest Updates
41
Table: Indonesia - Cocoa Production And Consumption Outlook
41
Table: Risk To Outlook
42
Structural Trends
42
Table: Cocoa Production & Consumption (Indonesia 2012-2020)
46
Palm Oil Outlook
47
Latest Updates
47
Table: Indonesia - Palm Oil Production And Consumption Outlook
48
Table: Indonesia - Risks To Palm Oil Outlook
48
Structural Trends
49
Table: Indonesia - Minimum Wage ('000 IDR) & Palm Oil Production By Province, 2012-2016
52
Table: Palm Oil Production & Consumption (Indonesia 2013-2020)
54
Commodities Price Analysis
55
Global - Global Commodities Strategy
55
Table: SELECT COMMODITIES - PERFORMANCE AND BMI FORECASTS
55
Upstream Analysis
57
Asia GM Outlook
57
Table: Selected Countries - GM Crops Use (mn hectares)
61
Asia Machinery Outlook
63
Table: Select Countries - Average Size Of Farms, Hectares
68
Asia Fertiliser Outlook
70
Downstream Analysis
76
Food
76
Latest Updates
76
Structural Trends
77
Table: Food Sales (Indonesia 2015-2020)
79
Regional Overview
82
Competitive Landscape
88
Table: Major Agribusiness Companies
88
Demographic Forecast
89
Demographic Outlook
89
Table: Population Headline Indicators (Indonesia 1990-2025)
90
Table: Key Population Ratios (Indonesia 1990-2025)
90
Table: Urban/Rural Population & Life Expectancy (Indonesia 1990-2025)
91
Table: Population By Age Group (Indonesia 1990-2025)
91
Table: Population By Age Group % (Indonesia 1990-2025)
92
Methodology
94
Industry Forecast Methodology
94
Sector-Specific Methodology
95

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.