PRODUCING FARMERS - "It's Not Us Who Enjoy the Prices"

"We do get profits. However, the profits are fixed, do not follow the high and low prices in the market. The one who decides the prices is the company," said Samianto (50), a poultry farmer of Srumbung village, Gandusari district, Wednesday (8/6/2016), who became a partner of a private company in Malang, East Java.

At present, for example, the selling price of a live chicken in the market is Rp 18,000 (US$1.35) per kilogram, or down from Rp 19,500 previously. However, the contract the price is set at Rp 17,000 per kg so that the selling price is fixed at Rp 17,000 per kg. However, prices have been steadily increasing in the market.

Broiler chicken breeders in Blitar Regency, East Java, also do not enjoy the profits even though the price of chickens in the market has skyrocketed to Rp 30,000 per kg. The selling price of live chickens from farmers is decided in contracts jointly approved with partner companies.

Blitar is one of the centers for poultry breeding in East Java. There are about 3,000 broiler and laying chicken breeders in the area. The population of broiler chickens reaches approximately 4 million per annum and the laying chickens 15 million annually with egg production reaching 400 tons per day. The production of local free-range chickens (ayam kampung) reaches 3 million per year.

In the partnership system, the breeders do not take part in determining prices. On the one hand, they benefit because they do not bear the heavy burden of production costs.

On the other hand, however, what they receive is limited.

The breeders are only required to take care of the chickens, as all chicken seedlings, feed, vitamins, and sales are borne by the company. "The breeders only know that everything is available. Certainly there will be calculations but breeders really only need to make sure the chickens stay alive. Chicken deaths affect profits," said Sudanto (43), a breeder of Sumberagung Village, Selorejo District, Blitar. By calculating the total weight of the chickens multiplied by the contract price, and thensubtracting operating expenses (feed, medicines, etc), the income of breeders can be approximated.

Individual laying hen breeders still enjoy profits. Dewi, a breeder in Dadaplangu, Ponggok District, Blitar, said the price of chicken eggs was Rp 18,567 per kg at the farming site. Egg prices had been stable over the last three days. Ahead of the fasting month of Ramadhan, prices could reach Rp 19,500 per kg.

"With the current price, breeders get a profit. The limit is Rp 15,000 per kg. Below it, the farmers suffer a loss. Except, about three months ago when the price of corn was expensive, Rp 17,000 per kg still caused farmers losses," she said.

Length of the chain

Darman (55), a chicken breeder of Cintaraja Village, Tasikmalaya Regency, West Java, about 120 kilometers to the east of Bandung, is not happy even though chicken prices at traditional markets in Bandung are reaching Rp 40,000 per kg. He sold his chickens he raised for 35 to 36 days at Rp 20,000 per kg in cages.

Local wholesalers from Tasikmalaya later brought the chickens to wholesalers in Bandung. The fresh chickens were sold to markets in Bandung and its surrounding areas. The long distribution chain from chickenbreeders to consumers is the cause of soaring prices. It is also the cause of Darman not being happy seeing the high chicken prices at the consumer level. From the 600 day-old chicks (DOC) he raised, which 5 percent died, he got profits of Rp 1,500 per chick at a weight of 1 to 1.5 kg each.

In the previous harvest, the cost of production was approximately Rp 18,500 each with the price of a DOC Rp 5,000 each and the price of feed Rp 6,500 per kg. To meet the need for the Idul Fitri festivities, Darman bought more DOCs and feed. However, the price of a DOC soared to Rp 7,000 with the price of feed now at Rp 7,000 per kg.

Entering Ramadhan, chicken prices have gradually fell in the markets in Bandung regency, dropping to Rp 35,000 per kg. Darman is still worried because production costs (DOCs and feed) remains expensive. However, as a producing farmer he could not set the production cost, because it was the partnering company that provided DOCs, feed and medicines.

The company controls production from the upstream to the downstream as well as doing its own cultivation. The results of their cultivation were also sold at traditional markets and compete with those produced by traditional breeders. This is permissible under Law No. 18/2009 on Livestock and Animal Health.

Darman is a portrait of a traditional breeder, one ofsome 2.5 million across the nation. Acting chairman of the Indonesian Poultry Breeders Union Waryo Sahru said the farmers' business had to compete unhealthily with partnering companies in the free market.

When the chicken prices soar to Rp 40,000 per kg in traditional markets, the company's cost of production reach only Rp 14,000 per kg. "They can set the prices of DOCs at Rp 4,500 and Rp 6,000 per kg. Hopefully chicken prices do not fall to Rp 15,000 again. If it happens, it will be the death of traditional breeders," Waryo said.

Never determine

A similar situation is being felt by onion farmers. Dedi (27), a farmer in the Village of Padasugih, Brebes, Central Java, was seen drying onions on the fields, Wednesday. About 1.5 tons of onions were harvested on Friday from the fields in Krasak Village, not far away from Padasugih. "Yesterday [my onions] could have been bought for Rp 30 million [bulk price] or Rp 20,000 per kg," he said.

The offer cannot cover production costs, which reached Rp 32.5 million. The planting costs are expensive because the prices of seeds has reached Rp 41,000 per kg. Currently, seed prices range from Rp 48,000 to Rp 50,000 per kg.

The need for seeds for a 3,100 square-meter plot of land reaches 5 quintals, about Rp 20.5 million. The need for medicines and fertilizer reaches Rp 5 million, fees for planting Rp 5 million, and labor costs Rp 2 million.

Therefore, in harvest time, Dedi chose to not sell his onions to traders, but dries them to be used as seeds. Even though it will take two months to dry, it is considered to be the best option rather than suffer losses. "If later I can get 1.5 tons of seeds with a price of Rp 40,000 a kg, I will get Rp 60 million," he said.

For the time being, his land is used to cultivate corns. According to Dedi, farmers are never able to determine the selling price of their harvest. The prices of onions are fully in the hands of traders even though farmers receive information about prices in the market.

Most farmers sell their harvest under the wholesale system in the fields. A month ago, for a 3,100 square-meter plot of land farmers could get Rp 50 million. "Initially I was also hoping to get the sale for Rp 50 million or at least Rp 40 million. However, now it has fallen a lot," he said.

In fact, the retail price of onions remains high, about Rp 32,000 per kg. The chain of the onion trade is long, which creates the disparity of prices between the farmers and traders. Apart from wholesalers, there are also brokers who become intermediaries along the chain.

Not all farmers can sell their onions directly to retailers or consumers. Dedi said a friend of his once tried to sell onions directly to a wholesale market in Jakarta. Because of the absence of networks, his friend was harassed by traders, where nearly half of his onions he was carrying were lost in the incident.

Warsono (45), a farmer of the Village of Siasem, Wanasari District, Brebes, said the existence of intermediaries in the onion trade was difficult to avoid because not all merchants know farmers in the villages.

"Not all merchants come from farming regions so they do not know any farmers and, therefore, need local intermediaries," he said.

source: Kompas, Thursday, June 9, 2016