Supporting Indonesia’s commercial-scale beef cattle breeding industry
SISKA Partners Scaling-up - A Sign of Commercial Success
Since October 2016, PT Buana Karya Bhakti (BKB) has integrated Brahman Cross (BX) cattle production with their oil-palm plantation business – a SISKA model.
Since October 2016, PT Buana Karya Bhakti (BKB) has integrated Brahman Cross (BX) cattle production with their oil-palm plantation business – a SISKA model. BKB started with 300 imported BX heifers and 30 bulls and has seen their herd and cattle breeding business grow from strength to strength. They are now planning to increase their breeders to 2,000 head to achieve better economies of scale and expand into fattening and processing (slaughtering) and the direct sale of prime-cut meat to local retail markets.
IACCB has supported the BKB Board of Directors to develop a business scale-up plan that details three expansion options, and their economic viability, as follows.
- Organic growth - all heifers retained with the herd target being reached in 10 years
- Organic growth and an additional 100 pregnant cows purchased in year 4 achieving the herd target in 8.5 years
- Organic growth and an additional 300 pregnant cows purchasing in year 4 achieving the herd target in 6 years
CALFIN projected cashflow and other commercial indicators for each option, from 2020 to 2026, with assumptions based on actual BKB performance results over the past 3 years. Option 3, which requires a larger upfront investment, leads to better returns over the projected period.
IACCB’s other SISKA partner, PT Kalteng Andini Lestari (KAL) in Central Kalimantan, started with 250 imported BX heifers and 15 bulls in late 2016 / early 2017.
KAL plans to grow their herd to 900, including 400-450 breeders and focus on growing and fattening live male cattle. Challenges to achieve these expansion goals include financing, and potentially competition, as several companies in Central Kalimantan have already expanded their cattle operations.
IACCB is supporting KAL overcome these challenges by developing a business scale-up plan for 2020 until 2026 using CALFIN and assumptions based on actual KAL performance results over the past 3 years. Two options were developed, as follows.
- Herd Stability – with herd numbers not increasing from the current 500 head, including 200 productive heifers. This option does not require considerable additional investment, and may attain immediate self-sufficiency, but low returns.
- Organic Growth – with the herd increasing to 400-450 productive cows in 2 to 3 years, requiring additional investment and additional grazing area, but providing a higher return, and achieving a total herd of 1,300 head by 2026.