Putut Djagiri, senior vice president of Japfa, said that 90% of its capital expenditure next year will be used to expand production capacity at chicken feed mills in Medan and Padang in Sumatra adding another 96,000 tons of production.
It will also use the funds to convert its feed mills in Surabaya, East Java. The company will convert its fish feed factory to one producing chicken feed, which would increase feed productin by 120,000 tons. Japfa has 12 factories across the country.
“We will focus next year on our basic business – animal feed. That’s where we will put our investments next year,” Putut said in Jakarta.
Japfa’s existing plants will make an estimated total of 2.69 million tons of animal feed this year. Next year, the company wants to produce 3 million tons of animal feed to meet demand.
Japfa is one of the largest and most integrated agri-food companies in Indonesia. Its core business activities include animal feed manufacturing, chicken breeding, poultry processing and aquaculture farming.
Chicken production increase
Putut said the company had spent almost 80% of its capex this year to boost its day old chicken stock to 450 million from 370 million last year.
“It’s necessary to increase feed production capacity. We expanded our chicken farming this year; it means more chickens to feed,” Putut said.
Ignatius Herry Wibowo, a director at Japfa, said the company was considering building new plants in Palu, Central Sulawesi, or Manado, North Sulawesi, in 2013. The company currently has a chicken breeding facility in Manado.
Other animal feed producers have also laid out business plans in Indonesia for the next few years.
Charoen Pokphand Indonesia, Japfa’s rival, announced in September that it would spend Rp 2.5 trillion ($276m) to boost its chicken feed mill, breeding farm and food processing. Charoen secured a $250 million bank loan to finance this expansion.