(Bloomberg) --
In Indonesia, the chicken comes before the egg.
At least in the sense that the government is asking poultry breeders to throw away 10 million eggs or give them away for free in an attempt to support slumping chicken prices. It's hoping that a reduction in the number of eggs that may hatch will shrink chicken supplies and prop up retail prices that are near a three-year low.
While consumers may be happy with the lower cost of chicken -- one of the cheapest sources of animal protein in a country where millions survive on less than $2 per day -- it has been a struggle for breeders. The government wants to boost farm-gate prices to support the poultry industry.
The average retail price of chicken meat has plunged 25% this year to 30,050 rupiah ($2) per kilogram, according to the central bank-run Center for Information of Strategic Food Price. That's the lowest since at least July 2016, when the center started compiling the data.
“The only way we can do something about it is by discarding 10 million 19-day old hatchery eggs,” said I Ketut Diarmita, director general of Livestock and Animal Health. It will have a psychological impact on the market, he said.
Supply Cut
The plan follows an order in June to cull parent-stock chickens that are older than 68 weeks to ensure breeders fetch good prices for their flocks.
At least 45 poultry-breeding companies, including PT Japfa Comfeed Indonesia and PT Malindo Feedmill, will join the program until Sept. 20, according to the agriculture ministry. The program may have an impact on the supply-demand situation in October and can help breeders avoid further losses, Achmad Dawami, chairman of the Indonesia Poultry Breeding Association, said in text message.
Falling prices have hit the stocks of poultry producers. Shares of PT Charoen Pokphand Indonesia dropped 2.7% on Wednesday, taking this year's total losses to about 35%. Japfa Comfeed has dropped 29% this year, while Malindo Feedmill shares have slumped about 36%.
To contact the reporters on this story: Eko Listiyorini in Jakarta at elistiyorini@bloomberg.net;Yoga Rusmana in Jakarta at yrusmana@bloomberg.net;Harry Suhartono in Jakarta at hsuhartono@bloomberg.net
To contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, Atul Prakash
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