Sierad stick with investment plans despite dwindling IDR

Poultry breeder and animal feed producer Sierad Produce is set to invest IDR 350 billion (USD$31.2 million) for capital expenditure this year, the plan is to set up a feed mill and five commercial farms to meet the increasing demand in Indonesia.

In spite of a weakening currency, they will go ahead with the building of the feed mill in Sulawesi that will have a production capacity of 20 metric tonnes of poultry feed per hour. Sulawesi was selected, the company said, as it offered low cost raw materials.

Investment in the feed mill is estimated at IDR 30 billion (USD$2.7 million), and is part of the company’s IDR 3.9 trillion two-year programme to expand its production capacity and breed more day-old chicks.

There is rising demand in the country as Indonesians have turned to meat products with rising incomes which have allowed them more choice in their eating habits. The company has recently been forced to increase prices by up to 15% due to currency depreciation of the Indonesian Rupiah.

This has been a reaction to the fall in the rupiah against the US dollar in the last couple of months. The company sourced around 70% of raw material from the US, Brazil, Argentina and India making Sierad vulnerable to currency fluctuations.

So far this year the Indonesian Rupiah has fallen 18% against the USD, making imports costlier for Indonesian companies.