Wednesday, January 31, 2007

One Billion Chickens

Yesterday I read the Kompas daily headline on the impact of avian flu. I came across the statement made by an official from Coordinating Ministry of Economy as follows:
"At the moment, the production of chicken poultry reaches 1 to 1.2 billion chickens per year, or around 300,000 to 400,000 chickens per one cycle of breeding (three to four months). Due to avian flu, the consumption drops by 50-60 percent of that number".
One billion chickens! For one who doesn't fancy eating chicken, like myself, that's a flabbergasting number indeed.

But first, regardless of the validity of those numbers, can you spot something funny in above mentioned statement? Yes, 1.2 billions chicken (in a year) divided by four (one cycle) would never equal to 300,000. But let's just assume that he's been misquoted.

Now, check the one billion chickens production number.

From googling, Indonesia Poultry and Products Annual Overview - August 2005, released by US Department of Agriculture, Foreign Agricultural Services, reported that the estimate number of broiler chicken production in 2006 is 672,000 tons. Broilers consist of 60 percent of total chickens produced, the rest is local-breed variety. Combine the two, we have 1,120,000 tons chickens. Now, assuming average chicken's weight is 1.4 kg. So the number of chicken is 800,000 million. Not bad, we have 200 million chickens lost in calculation.

Next, 50-60 percent plunging consumption is a very big drop indeed, if that's the real case. In 2005, the avian flu human death announcement led only to 25 percent decline. I wonder why this year has bigger impact.

Furthermore, as the cost of production is IDR 8,000-8,500 per kg:
"... the minimum selling price is IDR 9,000 per kg. It's in a normal condition. (But) now to sell at IDR 3,500-4,000 only is already hard. As such, the loss might reach IDR 1 trillion. That's only taking account the direct impact to chicken farm, not yet the indirect one to restaurant, hotel, and traders".
OK, let's do simple math again. Let's say, the loss per chicken is IDR 5,000 (IDR 8,500 production cost minus IDR 3,500 actual selling price). If we put the total loss at IDR 1 trillion, it implies that we are talking about 200 million chickens. So the government assumes that they can contain the avian flu within less than one breeding cycle. The question, can the government do that?

To be fair, the one trillion IDR loss is, however, only half of the story because consumers will substitute chickens to other products --fish, meat, vegetables, instant noodles, etc--. There must be some gains in the latter's' business.

This, however, does not discard the fact that avian flu is a problem. A serious one.


  1. Let's say the average household size in Indonesia is 5 (some have many kids, some don't). With ~250 million people, there are 50 million households.

    Let's also assume every household consumes 2 chickens per month. That's 24 chickens per household per year.

    That makes a total annual consumption of 1.2 billions! :)

  2. bleu, if you're equipped with National Socioeconomic Survey 2005 --or any years--, you might find even funnier number of the household's chicken consumption. Try that, and good luck :-)

  3. Firstly, there should be government bailouts regarding this.

    Secondly, we're not sure if the demand remains low or has rebound.