Arief Witjaksono keeps a close eye on numbers related to Indonesia’s small but growing commercial chicken-farming industry.
“For every kilogram of chicken the average Indonesian eats, the average Malaysian consumes four times more,” the 38-year-old co-founder of Pitik—a smallholder chicken-farm aggregator—told The Ken. He also noted that since Malaysia is a comparable country with a majority Muslim population, Indonesia’s chicken consumption should eventually reach similar levels.
One key figure Witjaksono closely monitors is the price of chicken feed. Any fluctuation can significantly impact farmers’ profits, as the feed accounts for up to 65% of the total cost of raising broiler chicks.
Feed prices globally have been particularly volatile in the past couple of years, since the pandemic and the war in Ukraine disrupted supply chains. High feed costs have been plaguing the chicken-farming industry in India as well. In fact, a recent study study Telangana Today Indian poultry losing Rs 7,000 crore due to under-recovery in eggs Read more by a government agency in the state of Telangana estimates that Indian poultry farmers are incurring losses of around Rs 7,500 crore (~US$900 million) annually due to soaring feed prices and lower realisation prices for eggs. In the Philippines, soaring feed prices and and other factors culminated culminated The Ken Why chicken-loving Philippines is staring at a chicken crisi Read more in a chicken shortage last year.
Indonesia's chicken consumption
- 2018 7.55 kg
- 2020 7.9 kg
- 2022 8.21 kg
For entrepreneurs, lowering the cost of feed for chicken farmers may seem like a logical solution, but that’s a near impossible task in today’s globalised chicken industry. A major obstacle is the fact that soybean—a crop that many countries, including Indonesia, don’t grow enough of—is the key ingredient in commercial chicken feed.
As a result, entrepreneurs like Witjaksono are trying to optimise the amount of feed needed to raise healthy birds. Pitik is one of several smallholder chicken-farm aggregators that have emerged in recent years. The company has signed up ~400 farmers, helping them improve their farming practices or, in some cases, managing the entire farm on their behalf. The startup raised a US$14 million Series A round in May 2022.
One simple tweak that Pitik has implemented is better temperature and light control, which has helped reduce average mortality rates on its farms to 5% from a national average of around 10%, claims the company.
However, growing chickens is only a small part of the entire value chain and smallholder farmers like those in Pitik’s system face tough competition from much larger companies such as Thailand’s CP Group and Singapore-headquartered Japfa.