The document provides an overview of the corn value chain in Indonesia. It discusses: - East Java province where corn is a major crop - The corn value chain from inputs and production to processing and retailing - Indonesia's ranking as the 16th largest economy in the world - Corn production trends from 2008-2012 and the gap in needed production in 2012 - Challenges and opportunities in the corn sector - Governance policies to support the corn value chain - Business linkages between corn and poultry and fast food industries

1. Value Chain of Corn in Indonesia
(Based of Secondary Data)
By Muhamad Ahsan (UIN SA Surabaya)
Livelihoods and Markets
Coady International Institute –St. FX University – Nov. 2013

2. Contents
• East Java at a glance
• Corn value chain in village
• About Indonesia
• Compare of foods product
• Sub-sector analysis
• Gap of corn needed in 2012
• Challenges and opportunities
• Governance policies
• Corn value chains in Indonesia
• Business linkages
• Challenge to invest in Indonesia

3. East Java (Jawa Timur) is a province of
Indonesia. It is located on the eastern part of
the island of Java and includes the
neighbouring islands of Madura, and the
Kangean, Sapudi, Bawean and Masalembu
groups.
Its capital is Surabaya, the second largest city
in Indonesia and a major industrial center,
port, tourism and education also. It covers an
area of 47,922 km2. At the 2010 Census, the
province's population was 37,476,000.
Source : bps, wikipedia.org (edited)
Image adopt from my ‘grandma’ google
East Java at a Glance

4. Inputs
Production
Aggregation
Processing
Retailing
Dupont Zyngenta
Charoen Monsanto
Small-farmers
Large traders
Cargill
Japfa
Comfeed
Charoen
Medium-farmers
Small-
traders
Corn
Market
Matahari
Feed
Market
Export
Market
Medium-
traders
Corn Value Chain
in Service Learning /KKN -Bareng Village, Bojonegoro (East Java)
Feed
Market
Note: dotted line = limit of value chain in village

5. About Indonesia
• Do you know Bali island?
• Indonesia is archipelago country who have
more than 17.000 islands
• Has 34 provinces with population more than
238 million peoples
• Multi ethnics (India, China, Arab, Java, Melayu
etc.) and local languages; with official office
Bahasa Indonesia
• Economic growth >= 5-6% / year

6. (millions of
Ranking Economy US dollars)
USA 1 United States 15.684.800
CHN 2 China 8.358.363
JPN 3 Japan 5.959.718
DEU 4 Germany 3.399.589
FRA 5 France 2.612.878
GBR 6 United Kingdom 2.435.174
BRA 7 Brazil 2.252.664
RUS 8 Russian Federation 2.014.776
ITA 9 Italy 2.013.263
IND 10 India 1.841.717
CAN 11 Canada 1.821.424
AUS 12 Australia 1.520.608
ESP 13 Spain 1.349.351
MEX 14 Mexico 1.177.956
KOR 15 Korea, Rep. 1.129.598
IDN 16 Indonesia 878.193
TUR 17 Turkey 789.257
NLD 18 Netherlands 772.227
SAU 19 Saudi Arabia 711.050
CHE 20 Switzerland 632.194
Source: WB, 2012
GDP Ranking

7. Map of Indonesia

8. Production of 5 foods
Production/Year 2008 2009 2010 2011 2012
Rice 60.325.925 64.398.890 66.469.394 65.756.904 69.056.126
Corn 16.317.252 17.629.748 18.327.636 17.643.250 19.387.022
Soybean 775.710 974.512 907.031 851.286 843.153
Peanuts 770.054 777.888 779.228 691.289 712.857
Green Beans 298.059 314.486 291.705 341.342 284.257
Casava 21.756.991 22.039.145 23.918.118 24.044.025 24.177.372
Sweet Potato 1.881.761 2.057.913 2.051.046 2.196.033 2.483.460
Source: BPS, 2013

9. 0 10.000.000 20.000.000 30.000.000 40.000.000 50.000.000 60.000.000 70.000.000 80.000.000
Rice
Corn
Soybean
Peanuts
Green Beans
Casava
Sweet Potato
2012
2011
2010
2009
2008

10. Sub-sector selection
Rice Corn Soybean Peanut Green Beans Casava Sweet Potato
Growth in market demand 4 4 4 3 2 3 3
Participation of women 4 4 4 4 3 4 4
Competitiveness potential 3 4 3 3 2 3 3
Participation of the poor 4 4 4 4 4 4 4
Start up capital 3 3 3 2 2 4 3
Impact on the environment 4 4 4 4 4 2 3
Employment generation 4 4 3 3 3 3 3
Supportive business link 3 4 4 4 3 4 4
Score 29 31 29 27 23 27 27

11. Sub-sector Octagon Analysis
0
1
2
3
4
5
6
7
Growth in market
demand
Participation of women
Competitiveness
potential
Participation of the poor
Start up capital
Impact on the
environment
Employment generation
Supportive business link
Rice
Corn
Soybean
Peanut
Green Beans
Casava
Sweet Potato
Rating:
1= poor
2= fair
3= good
4= very good
5= excellent

13. Graph of corn needs in 2012
To cover of corn needed government imported from many countries. In May
2013, imported more than 740 thousand ton; from India (681.000 ton),
Brazil (45.000 ton), Paraguay (8.500 ton), Argentina (2.401 ton), US (892 ton),
others (2.716 ton) (Source: finance.detik.com)
Source: Directorate General of Food Crops

14. Challenges and Opportunities
Challenges
• Increasing demand (population 1,3% each
year and poultry farm more than 51%)
• Increasing animal feed mill (5%/year; in 2012
need 7 million ton) because there 3 new
factory
• Increasing corn for food industries
• Cropping pattern is uneven, 79% planted at
dry land
• Corn still second crop
• No guarantee price, depend on market
mechanism
• Lack of technology cultivation
• Small size of farmer land
• Competing with other product (fruits like
melon, water melon, cucumber, tomato, etc.)
Opportunities
• Average of national production below of
potential product (idle capacity)
• Corn crop more fewer pests and diseases
• Private sector was active to seed industry,
technology and market
• Simple technology to farmer
• Relatively favorable price
• Supported by government
• Opportunity to open new area for farming

15. Governance Policies
• Subsidies of seed and manure/fertilizer to farmer but gradually reduced
• Encouraging and enlarging of private actors of corn agribusiness
• Increasing quality through handling of post-harvest
• Facilitating of market through partnership, information dissemination,
estimate of harvested area and production
• Develop corn hybrids, composites of high production and nutritious corn
to replace local composite and low productivity
• Encouraging corn-based food industry, through the provision of raw
materials in domestic corn production according designation (corn
noodles, etc.)
• Encouraging evenly of crop / harvest every month throughout the year
with the appropriate cropping pattern that climate condition
• Shorten of marketing chain from farmer to animal factory feed and other
consumers

16. Inputs
Production
Aggregation
Processing
Retailing
Large input supply
companies = 7
Nurseries
Small-farmers
Large traders
Animal Feed
Factories = 65
Small-
traders
Corn
Market
Export
Market
Medium-
traders
Corn Value Chain in Indonesia
Feed
Market
Commercial
R & D
Cooperatives
Financial
service
BRI
Bank
Importing
Local
Importers

17. Business Linkages
DOC (Day Old Chicken) and Poultry

18. Business Linkages
Fast food restaurant
142
outlet
473
outlet
200
outlet
148
outlet
>
105
outlet
>
3
00
outlet

19. Challenge to invest but you must have
halal stamp

20. References:
• Badan Pusat Statistik, 2013
• Direktorat Jenderal Tanaman Pangan Indonesia, 2013
• World Bank,2012
• Finance.detik.com, 2013
• ‘Grandma’ GOOGLE for images
• Website supporting:
– http://palingseru.com/18412/5-restoran-cepat-saji-terbesar-di-indonesia
– http://food.detik.com/read/2011/05/31/164036/1651094/906/jalan-panjang-aw-raih-sertifikat-halal
– http://acara-event.com/10-restaurant-fast-food-favorit/
– http://industri.kontan.co.id/news/getol-tambah-gerai-kfc-perbesar-belanja-modal
– http://finance.detik.com/read/2013/04/02/183927/2209761/4/sudah-punya-400-gerai-kfc-masih-mau-
tambah-puluhan-lagi
– http://bisniskeuangan.kompas.com/read/2013/07/31/1303386/McDonald.s.Indonesia.Terus.Lakukan.Ekspansi.
Bisnis
– http://kabarbisnis.com/read/2838598
– http://djpen.kemendag.go.id/app_frontend/admin/docs/researchcorner/9911376300311.pdf
– http://www.bi.go.id/web/id/UMKMBI/Kelayakan+Usaha/Pola+Pembiayaan/Tanaman_Pangan/jagung.htm
– http://balitsereal.litbang.deptan.go.id/ind/images/stories/volimp.pdf
– http://balitsereal.litbang.deptan.go.id/ind/images/stories/nileks.pdf
– http://kabarbisnis.com/read/2837632
– http://tanamanpangan.deptan.go.id/doc_upload/44_ISI.pdf
– http://daftarperusahaanindonesia.com/2008/10/daftar-alamat-perusahaan-penyedia-makanan-pakan-hewan-
ternak-bag1-dari-3/
– http://www.vemale.com/brand/16107-texas-fried-chicken.html
– http://www.datacon.co.id/Seed1-2009Ind.html
– http://industri.kontan.co.id/news/hoka-hoka-bento-tambah-satu-gerai-setiap-bulan
– http://en.wikipedia.org/wiki/East_Java

21. Terima Kasih
Thank You