Dutch finance company Rabobank says there is potential for Indonesia, Southeast Asia’s second largest soya meal consumer, to enter the soya crushing industry.

Indonesia consumed around 4.4M tonnes of soya meal in 2017, forecast to increase to 5.6M tonnes in 2027 due to increasing meat production that requires animal feed, made from soya meal, according to a new November Rabobank report.

Indonesia was a small soyabean oil consumer because of the abundance of cheap domestic palm oil but soya crushing plants would generate positive margins if the produced soyabean oil could be exported.

“Soyabean crushing facilities could be built in Indonesia to cater to the rising domestic demand for soya meal,” said Rabobank senior analyst, grains and oilseeds, Oscar Tjakra. The plants would need to be located near large areas of soya meal consumption, with appropriate logistics, such as the western part of Java.

Western Java had 18.1M tonnes of feed mill capacity, making it the highest consumer of soyabeans domestically. The area also had existing dry bulk grain ports, which could minimise logistics costs.

Animal feed was also produced in Sumatra, with 4.2M tonnes capacity; Sulawesi, with 1.5M tonnes capacity; and Kalimantan, with 800,000 tonnes capacity.

Rabobank said several factors were needed for soyabean crushing in Indonesia to work:

· Large-scale facilities to benefit from economies of scale

· Soyabean origination and efficient handling capabilities from vessels to crushing plants

· Domestic soya meal sales and distribution capabilities

· An edible oil export sales network and efficient logistics, already in place in some Indonesia ports.