Historical Trend Analysis and Key Determinants of Live Chicken Selling Price in Indonesia

The live chicken market in Indonesia is an essential component of the nation’s food supply chain, playing a critical role in both rural and urban areas. Over the past few years, the selling price of live chickens has exhibited various trends influenced by numerous factors, including production levels, regional demand, seasonal fluctuations, feed costs, and government policies. Understanding the historical trends of live chicken prices provides a foundation for predicting future prices and making strategic business decisions for stakeholders in the poultry industry.

This article delves into the historical price trends of live chickens in Indonesia and the key factors that significantly influence pricing. By analyzing these trends, we can better understand the market dynamics and predict future prices with more accuracy. Moreover, we explore variables such as body weight, regional differences, feed costs, and seasonal impacts that have historically determined live chicken prices. The goal is to provide a comprehensive view of the market, allowing producers, suppliers, and policymakers to make informed decisions.

Historical Price Trends in Indonesia’s Live Chicken Market

Over the past decade, live chicken prices in Indonesia have shown considerable fluctuations, driven by both internal market factors and external economic conditions. The general trend has been characterized by seasonal price peaks during high-demand periods, such as religious holidays (e.g., Ramadan, Eid al-Fitr) and festive seasons, followed by more stable or slightly declining prices during off-peak months.

Key Observations from Historical Trends:

1. Seasonal Demand Peaks:

• Prices typically surge during the months leading up to religious holidays, particularly during Ramadan and Eid al-Fitr. These holidays see a sharp increase in demand for poultry, which drives up prices temporarily. In some regions, price spikes of up to 15–20% have been observed during these high-demand periods.
• Following these spikes, prices generally normalize in the subsequent months, returning to their baseline or slightly lower due to oversupply from producers trying to meet the holiday demand.

2. Regional Price Variations:

• Historically, certain regions such as Banten, Jawa Barat, and Sumatra have commanded higher prices due to their proximity to major urban markets and better infrastructure. Regions further from urban centers or with logistical challenges, such as Sulawesi or Kalimantan, tend to have lower prices or higher price volatility.
• Urban areas have shown consistently higher price ranges, often due to stronger market demand and logistical advantages.

3. Long-term Price Growth:

• Over the years, there has been a gradual upward trend in live chicken prices, driven by rising production costs (primarily feed), increasing consumer demand, and inflationary pressures. While short-term fluctuations are common, the overall long-term price trajectory has been upwards, with prices increasing approximately 10–15% per year in many regions.

Factors Significantly Determining Live Chicken Selling Price

Various factors contribute to the fluctuations and trends in live chicken selling prices in Indonesia. Understanding these determinants is crucial for predicting future price movements and identifying opportunities for market players. Below, we elaborate on the most significant factors that impact the pricing of live chickens.

1. Body Weight (ABW): The Most Direct Pricing Factor

One of the most direct factors influencing the price of live chickens is the average body weight (ABW). ABW refers to the weight of the chickens at the time of sale and is closely tied to consumer preferences. Heavier chickens may not always fetch the highest price per kilogram due to diminishing market demand for overly large poultry, but chickens below market weight expectations also underperform in terms of pricing.

• Optimal ABW Range: Historically, chickens with an ABW of 1.6 to 1.8 kg command the highest prices. This weight range is considered ideal for both consumers and businesses, offering a balance between weight and cost-efficiency.
• Heavier Chickens: Chickens above 1.9 kg may see a reduction in price per kilogram because heavier birds are less in demand for household consumption, especially in urban markets. Prices per kilogram for these birds can be up to 10% lower than those within the optimal weight range.
• Lighter Chickens: On the other end of the spectrum, chickens below 1.5 kg may also command lower prices due to perceived lower value by buyers.

2. Feed Costs: The Backbone of Production Expenses

One of the largest costs in poultry farming is feed, which makes up 60–70% of the total production cost for farmers. Historically, increases in feed prices — whether due to local supply shortages, rising international commodity prices, or transportation costs — have been directly reflected in higher live chicken prices.

• Corn and Soy Prices: Corn and soy are key components of chicken feed, and any fluctuations in the global prices of these commodities have a cascading effect on chicken prices in Indonesia. For example, periods of high global demand for corn have historically led to significant increases in chicken prices domestically.
• Feed Quality: The quality of feed also plays a role in the growth rate and health of chickens. Poor-quality feed may lead to slower growth, requiring longer feeding periods and thus raising production costs, which are passed on to consumers through higher selling prices.

3. Supply Chain and Logistics

Indonesia’s unique geography, with its archipelagic structure, means that logistics and transportation play a vital role in determining live chicken prices. Regions closer to urban centers like Jawa Barat and Banten tend to experience higher and more stable prices due to easier access to markets. Conversely, regions like Kalimantan or Sulawesi experience more volatility because of transportation challenges and higher distribution costs.

• Infrastructure: Regions with well-developed transportation infrastructure benefit from lower transportation costs, which in turn leads to more stable and higher prices. Historically, regions with poor infrastructure tend to see larger price fluctuations and lower average prices due to the additional cost of moving live chickens.
• Supply Chain Efficiency: Efficient coordination between producers, suppliers, and retailers can help stabilize prices, as delays in the supply chain often result in oversupply or undersupply, both of which can negatively impact pricing.

4. Regional Demand and Market Preferences

Regional demand plays a significant role in live chicken pricing. Urban areas with higher population densities, such as Jakarta, Bandung, and Surabaya, exhibit stronger demand for poultry and thus higher prices. Moreover, market preferences in different regions regarding chicken size and weight can lead to significant price variations.

• Urban vs Rural Markets: Urban regions have historically commanded higher prices due to greater demand and purchasing power, whereas rural areas tend to have lower prices. This divide is a consistent trend observed across the Indonesian poultry market.
• Regional Preferences for Chicken Type: Certain regions prefer larger chickens, while others may prefer smaller ones, which has led to pricing differences based on local demand.

5. Seasonality and Religious Holidays

As previously mentioned, seasonal demand fluctuations have been a consistent factor influencing live chicken prices. During the months leading up to and during Ramadan and Eid al-Fitr, the demand for poultry spikes significantly, often resulting in price increases of 15–20%.

• Holiday Demand Spikes: Poultry prices peak during religious holidays, and farmers often attempt to adjust their production cycles to meet this increased demand.
• Post-Holiday Decline: After the holiday period, prices generally return to normal or slightly lower levels due to oversupply.

Other Variables Affecting Live Chicken Pricing

In addition to the core determinants, other variables also influence live chicken pricing in Indonesia:

1. Government Policies and Regulations: Changes in government policies, such as subsidies on feed prices or restrictions on poultry imports, can have a direct effect on the domestic pricing of live chickens.
2. Disease Outbreaks: Disease outbreaks such as avian influenza have historically caused disruptions in both production and market confidence, leading to sudden price changes. Outbreaks tend to reduce supply, driving prices higher, but can also dampen demand if consumers become wary of poultry products.
3. Environmental Factors: Climate and weather conditions can affect chicken farming. Extreme weather patterns such as floods or droughts can disrupt feed production, transportation, or farming conditions, resulting in price fluctuations.
4. International Trade: While most of Indonesia’s poultry market is domestically driven, global trade dynamics can affect input costs (especially feed) and market competitiveness, influencing local prices.

Conclusion

The live chicken market in Indonesia is shaped by a combination of regional dynamics, production costs, and market demand. Key factors such as average body weight, feed prices, seasonality, and logistics infrastructure play a significant role in determining live chicken prices. By understanding these historical trends and determinants, stakeholders can better predict future price movements and develop strategies to optimize production and profitability.

As the market moves into 2024 and 2025, these factors will continue to drive price trends. By paying attention to key variables such as feed costs, regional demand, and production cycles, producers can position themselves to maximize returns while navigating the challenges posed by a dynamic and ever-changing market.