Japan looks to Indonesian poultry supplies after Chinese food scandal

JAKARTA Wed Aug 20, 2014 5:53am EDT

JAKARTA Aug 20 (Reuters) - Indonesia and Japan are in talks to resume poultry shipments from the Southeast Asian nation after a 10-year stoppage, an Indonesian government minister said on Wednesday, with any agreement likely to be worth an initial $200 million per year.

The government talks come just weeks after the latest food safety scandal involving Chinese meat suppliers caused McDonald's Corp in Japan to withdraw its full-year earnings forecast.

Japan banned Indonesian poultry imports about 10 years ago due to concerns over avian flu, and any resumption in shipments could benefit poultry producers such as PT Charoen Pokphand Indonesia Tbk, PT Malindo Feedmill Tbk and PT Japfa Comfeed Indonesia Tbk.

Their stocks rose in a range of 1.6 percent to 3 percent on Wednesday, outperforming the 0.5 percent gain on the broader Jakarta stock exchange.

"We expect to export chicken to Japan worth around $200 million, or 10 percent of Japan's total chicken import market of $2 billion," Indonesia's Trade Minister Muhammad Lutfi told reporters. "Japanese chicken inspectors are now here in Indonesia to inspect our poultry industry."

Although talks are still ongoing, Lutfi said he was optimistic the ban would be lifted and exports would resume by December.

Japanese government officials could not be contacted immediately for comment.

An undercover local Chinese TV report on July 20 showed workers at Shanghai Husi Food Co Ltd using expired meat and doctoring food production dates. Regulators immediately closed the factory, which is part of OSI Group LLC, a U.S. food supplier and important McDonald's partner. (Reporting by Yayat Supriatna; Additional reporting by Eveline Danubrata; Writing by Michael Taylor; Editing by Muralikumar Anantharaman)