Chapter 2

Feed Economics

The feed mill is the part of CPIN a casual reader underweights. On the group's revenue line, feed is only 30% of external sales; inside the segment note it is a Rp52.2 trillion operation — the largest by throughput, most of it consumed by CPIN's own farms. Its segment result has sat in a narrow Rp3.3–4.1 trillion band for six years while the downstream swung from a loss to a record. Feed is the keel that lets the company survive its own cycle — but the same numbers show it does not set the upside.

The engine most of the group's revenue hides

The reported segment mix understates feed twice over. What reaches the top line as "feed" is only the Rp21.0 trillion sold to third-party and plasma farmers [1]. Add the Rp31.2 trillion of feed transferred internally to CPIN's own broiler and day-old-chick operations and total feed throughput was Rp52.2 trillion in FY2025 — larger than the broiler segment and roughly three-quarters of consolidated revenue in volume terms [2].

Source: FY2025 Consolidated Financial Statements, Note 36 [3].

That 60% internal share is the first reason feed earns steadily: roughly Rp31 trillion of its annual output goes to CPIN's own chicken farms, which must be fed whatever the broiler price is doing. The mill runs against captive demand that the cycle cannot switch off, and the remaining ~40% is sold at market to independent and plasma farmers. Feed segment assets of Rp22.8 trillion are the single largest block on the balance sheet — 51% of allocated segment assets — so this is a capital-heavy business, but one whose volume base is unusually protected [4].

The keel and the sail

Feed's segment result — allocated revenue less allocated cost of goods sold and operating expenses [5] — has barely moved across the cycle. It was Rp3.91 trillion in FY2020, Rp3.58 trillion in FY2021 [6], Rp3.33 trillion in FY2022 [7], then Rp4.11 trillion, Rp3.98 trillion and Rp3.84 trillion in FY2023–FY2025 [8] [9]. Six years, a band of roughly Rp3.3–4.1 trillion, no year of loss.

The downstream — broiler, day-old chick and processed chicken combined — did the opposite.

Downstream = broiler + day-old chick + processed chicken segment results. Source: FY2023 and FY2025 Consolidated Financial Statements, segment notes [10] [11].

FY2023 is the year the structure shows through cleanest. The three downstream segments together lost Rp142 billion — broiler down Rp420 billion, day-old chicks down Rp302 billion, only processed chicken positive [12]. Feed earned Rp4.11 trillion, which was 104% of the group's entire segment result. In its worst downstream year of the cycle, the company's profit was the feed business, and everything else was a drag. That is what "durable earner" means in cash terms, not adjective terms.

Feed steadies; the downstream sets the swing

Put the two on a margin basis and the division of labour is unmistakable. Feed's result margin — on total segment sales including internal transfers — held between 7.4% and 8.3% every year. The broiler margin ran from minus 1.1% to plus 8.3% over the same four years.

Result margin = segment result ÷ total segment sales (external plus inter-segment). Source: FY2023 and FY2025 segment notes [13] [14].

The full segment table makes the point at the level of rupiah. Note the last column: feed's share of group result falls not because feed weakens but because the downstream recovers into it.

Feed total sales include inter-segment transfers. Source: FY2023 and FY2025 Consolidated Financial Statements, segment notes [15] [16].

Why the mill holds when the farm does not

Feed's raw material is the same commodity risk everyone in poultry carries: corn and soybean meal are, in management's own words, "a substantial component of feed's raw material cost", their prices set by weather, harvests and global supply [7]. The company imports the raw materials it cannot source locally — soybean meal especially, which has no meaningful domestic crop — so a shock like the 2022 spike in soybean-meal prices after the invasion of Ukraine feeds straight into cost [17]. Feed's stability is therefore not the absence of input volatility; it is the ability to pass that volatility through.

Two structural features make the pass-through work. First, pricing power over a fragmented buyer base: feed is sold in bags to tens of thousands of independent farmers who have no substitute at CPIN's scale and quality, so cost increases move into price with a lag rather than into margin permanently. Second, the company has spent the cycle shortening its own corn supply chain — sourcing from more than 21,000 plasma corn farmers through affiliate BISI International and building corn drying and storage next to its feed mills, which lowers transport cost and secures the largest single input [18] [10]. This is why feed dipped only modestly in the FY2021–FY2022 input squeeze — result fell from Rp3.91 trillion to Rp3.33 trillion, about 15%, and never turned negative [19] [20] — while the broiler business, a pure price-taker on live-bird prices, fell into loss.

The corn dependence is also the reason to watch feed rather than assume it: management flags that the poultry industry "is driven by cyclical factors, in particular, the availability and pricing of raw materials used in poultry feed" [7]. A domestic corn failure or a soybean-meal spike that outruns CPIN's ability to reprice would compress feed and the downstream at once — the one scenario in which the keel and the sail move the same way.

What feed does not do

The stabilizer reading has a hard limit, and FY2025 draws it. In the record year, feed's result did not lead — it fell, from Rp3.98 trillion to Rp3.84 trillion, and its share of group result dropped to 45% [21]. The extra Rp2.3 trillion of group segment result that made FY2025 a record was almost entirely downstream: broiler alone added Rp1.3 trillion and processed chicken swung from a Rp82 billion loss to a Rp862 billion profit [22]. Feed keeps the company solvent through the trough; it does not create the peak. That is the division the Business and Cycle chapter framed, now measured: the feed core stabilizes group profit, but the earning power the market is being asked to value is downstream and cyclical.

One caveat cuts against reading feed's steadiness too cleanly. Because ~60% of feed "sales" are internal transfers priced by CPIN itself, the split of profit between feed and broiler is partly an allocation choice, not purely an arm's-length market outcome [23]. If the company holds feed transfer prices firm while live-bird prices collapse, feed will look stable and broiler will absorb the hit by construction. The evidence that feed's stability is real, not just accounting geography, is the external channel: the ~40% of feed sold to independent farmers is priced at market, and that arm's-length feed business has stayed profitable through the same trough. The read to hold is that feed is a genuine cross-cycle earner; what would sharpen it is a year in which corn and soybean-meal costs spike and CPIN cannot reprice — the test feed has not yet failed, and the number to watch is the feed result margin holding its 7–8% band.