INSIGHT FROM INDONESIA

WILLIAM BULO, GENERAL MANAGER, JJAA

43 Feedlot & 143 Abattoirs (RPH)

Cattle Producers

In the middle

High demand,

Low Cattle Population

27 % of Indonesian lives in Western Part of Java

FEEDLOT AND ABATTOIR DISTRIBUTION

Source : Gapuspindo , 2016

East and Central Indonesia Rural & remote area from city

Cities in West Indonesia

Cities in West Indonesia

Cities in West Indonesia

$10 - $13 /kg

$9 - $12 /kg

$7 - $10 /kg

$5 - $9 /kg

LOCAL CATTLE

AUSTRALIAN CATTLE

(AUSTRALIAN) BOXED BEEF

INDIAN BUFFALO MEAT

SUPPLY MAIN AREA CONSUMED WET MARKET PRICE (AUD)

INDONESIA BEEF SUPPLY

INDONESIA BEEF SUPPLY

* Actual YTD Sep 2017

SUPPLY 2016 2017 Forecast

Total Beef Consumption 651,424 t 100% 604,996 t 100%

Local Cattle 441,014 t 68% 409,582 t 59%

Total Beef Imported 112,696 t 17% 104,664 t 18%

→ Box Beef 63,421 t 10% 42,976 t 12%

→ Indian Buffalo Meat 49,275 t 8% 20,622 t 6%

Imported Cattle 97,714 t 15% 90,749 t 23%

or Equal to 581,925 hd 540,000 hd

Source : MoAgriculture RI, Compiled, 2017

AUSTRALIAN LIVE CATTLE IMPORTS 2016 VS 2017

-

20,000

40,000

60,000

80,000

100,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Hea

d

IMPORTS Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTAL

2016 30,032 58,515 49,706 53,776 20,132 85,901 46,461 81,576 - 20,283 69,273 66,270 581,925

2017 15,545 34,408 53,892 35,064 41,785 28,250 18,007 52,665 54,769 40,000 35,000 30,000 439,385

2017 Forecast

September 2016 no imports due to the government introducing policy to feedlots to apply 1:5 breeder ratio

Significant increase from October to March 2017 to compensate for no imports in September until late October 2017

2017 imports 24 % lower than 2016 due to higher Australian cattle prices and slower Indonesia market

2017 YTD 2016

Forecast Source : Gapuspindo , 2017

INDONESIAN FEEDLOTS REQUIREMENTS

IDEAL SPECIFICATIONS NOT IDEAL

Reasonable Price ADG producer Prefer Brahman Cross, Charbray 320 – 350 kg BSC 2- 3 / 5 Age 0 – 2 teeth Slick Coat

Forward condition, fat cattle

Anything too Hairy

Straight Shorthorn

MANAGABLE : CATTLE OF DIFFERENT SPECS BUT FOR THE RIGHT PRICE

OP

ERAT

ION

AL

KP

I

ADG

• CATTLE

• RATION

• HANDLING

• FEED MANAGMENT

FCR

• CATTLE

• RATION

• HANDLING

• FEED MANAGMENT

CARCASS YIELD

• CATTLE

• RATION

• DOF

• FEED MANAGMENT

DOF

• IMPORT MANAGMENT

• CATTLE

• ADG

• SALES MANAGMENT

COST OF GAIN

1. CATTLE: Genetics, frame, age, condition, temperament and breed

2. RATION: Quality of commodities & ration formulation

3. HANDLING & CONDITIONS: Low stress handling, pulling sick cattle, cleaning and density in pens, rain, temperature

4. FEED MANAGEMENT: Feed, allocation, timing, loading, mixing, delivery. KEY

FA

CTO

RS

FEEDLOT KPI

CATTLE SPECS

SMALL FRAME Breed Genetics: Cross bred brahman with some Bos Taurus content. Allows for

continued growth later in the feeding program, whilst retaining carcass yield. Small frame, store condition <330 kg: Earlier to mature, weight gain will plateau

earlier, resulting in higher fat content and lower ADG. Medium frame, store condition 330 – 360 kg: Ability to maximize feedlot

performance and supply the current market demand. Large frame, store condition > 360 kg: Ability to maximize feedlot performance.

Currently the market requires smaller cattle, must sell in 90 days, before too heavy. Forward condition: Slower growth, and will be early to mature in the feedlot,

therefore hard to manage with DOF to meet customer needs. Higher price to purchase kg that could be gained in the feedlot.

Slaughter : Require less DOF to achieve maximum potential, more difficult to sell under the current market conditions. More health and non-eater problems on arrival than younger feeder cattle. The trade off is cheaper purchase price.

GENETICS

BODY SCORE

AGE

FRAME

60 DOF 80 DOF 100 DOF 120 DOF

1.9 Kg

1.7 Kg

1.5 Kg

ADG

1.3 Kg

40 DOF

PERFORMANCE BY CATTLE TYPE

Slaughter Steer: Compensatory growth and then fast decline in performance.

Forward Condition: Cannot maximize growth in first 40 DOF. Will go to fat quickly.

Feeder medium-Large frame: Reach higher growth first 40 DOF and can retain growth for longer.

Small Frame Steers: Can not maximize growth in 40 days, ADG will Plateau and lay fat down earlier.

PERFORMANCE BY BREED

CHARBRAY Higher carcass yield Less stress, good temperament Handle conditions, with brahman cont. Higher ADG performance: +0.10 kg/day

BRANGUS Higher carcass yield Handle conditions but need slick coat Harder to handle shipping conditions Higher ADG performance: +0.07 kg/day

DOUGHTMASTER Faster to adapt to conditions Less stress, good temperament Higher carcass yield Higher ADG +0.04 kg/day

BRAHMAN CROSS Heat and humidity resistance Easier to adapt to environment Can have good ADG, Yield and feed

conversion

SANTA GERTRUDIS Less Heat resistance, longer to adapt Higher stress after shipping Lower feed intakes Lower ADG: - (0.04) kg/day

BREED VS ADG*

Brahman Cross Base

Charbray + 0.10 kg/day

Bragus + 0.07 kg/day

Droughtmaster + 0.04 kg/day

Santa - (0.04) kg/day

* ADG based on data from 22,000 head of Feeder Steers (Santa Gertrudis is a low percentage of the total).

* All dollar amounts shown in AUD

STEER

PROFITABILITY Feeder Steer

In Spec Feeder Steer

Out of Spec

Feeder Steer

Forward Condition

Slaughter/Ox

OPERATIONAL PERFORMANCE VS PURCHASE PRICE BY CATTLE TYPE

ADG 1.55 1.35 1.40 1.35

FCR 8.71 9.63 10.00 10.37

CARCASS YIELD 50.80% 50.20% 49.80% 50.00%

DOF 120 120 90 90

COG $2.77 $3.17 $3.10 $3.21

Purchase KG 350 350 360 470

Sales KG 533 509 482 587

Pruchase Price FAS $3.15 $2.90 $3.15 $2.90

Import Cost/Kg $1.14 $1.11 $1.13 $1.11

Break Even Point $3.79 $3.77 $4.00 $3.87Sales Price $3.82 $3.79 $3.82 $3.77

Profit/Loss per kg $0.03 $0.03 ($0.18) ($0.10)

Profit (Loss)/HD $17.41 $12.92 ($87.26) ($58.51)

BREAK EVEN

Considering all in spec feeder cattle with same average operational KPI

* All dollar amounts shown in AUD

PROFITABILITY OUTLOOK: IMPACT OF AUSTRALIAN PRICE

STEER HEIFER STEER HEIFER STEER HEIFER

ADG 1.55 1.40 1.55 1.40 1.55 1.40

FCR 8.71 8.93 8.71 8.93 8.71 8.93

CARCASS YIELD 50.80% 50.60% 50.80% 50.60% 50.80% 50.60%

DOF 120 110 120 110 120 110

COG $2.77 $2.96 $2.74 $2.96 $2.80 $2.97

Purchase KG 350 350 350 350 350 350

Sales KG 533 501 533 501 533 501

Pruchase Price FAS $3.05 $2.85 $3.20 $3.00 $3.35 $3.15

Import Cost/Kg $1.13 $1.12 $1.15 $1.13 $1.16 $1.14

Break Even Point $3.72 $3.70 $3.82 $3.81 $3.95 $3.92Sales Price $3.82 $3.77 $3.82 $3.77 $3.82 $3.77

Profit/Loss per kg $0.10 $0.08 $0.00 ($0.03) ($0.13) ($0.14)

Profit (Loss)/HD $51.69 $37.85 $0.73 ($16.41) ($67.59) ($72.22)

AUGUST 2017

OCTOBER 2017

JANUARY 2018

ANIMAL WELFARE

SMALL FRAME Follow cattle through supply chain with RFID from Australian station to abattoir

24 hour monitoring of cattle at feedlot for any health and welfare issues

High standards of low stress stock handling and care at the feedlot

Regular maintenance on equipment at feedlot and abattoirs

JJAA Animal Welfare officer in every abattoir, routine internal and external audits

Build, improve, and upgrade the facilities to meet the OIE guidelines for animal welfare,

Indonesian Government regulation, and ESCASS

SHIPPING

CATTLE HANDLING

& CARE

ABATTOIR

ANIMAL HEALTH

INDONESIAN BUTCHER REQUIREMENTS

REQUIRE DON’T WANT

Reasonable Price High Carcass Yield Consistent Carcass Yield Smaller Cattle (< 550 kg)

FAT LOW YIELDING LARGE CATTLE ( >550 KG)

MANAGABLE: SLAUGHTER CATTLE (COWS, HEAVY STEERS, BULLS, OX)

END CONSUMER

Most of the product was sold in wet market, few that goes to Supermarket;

70% - 50% Meat Ball Production; to be made into Bakso balls, prefer lean meat.

25% - 40% Hotel, Restaurant, Catering and Party; accept most meat cuts or side products of the cattle.

5% - 10% Household; which can accept any kind of meat or side product of the cattle.

BAKSO SOTO RENDANG

THANK YOU

PT. Juang Jaya Abdi Alam (Owned by CPC) Address : Sidomulyo, South Lampung, Indonesia