Risk Management Policies
The Company realizes that risk has become an integral part of every business process carried out by the organization. The impact of these risks can significantly affect the stability of the organization, which of course is inherent in all activities and decision-making in running a business.
The Company's risk management is carried out by taking into account changes in the environment, both external and internal. Risk management is also required in order to strengthen the application of GCG principles, especially related to upholding sound business practices and providing added value in line with the expectations of stakeholders.
Risk Factors
The Company’s financial performance and operations are influenced by many risk factors. These risks vary widely, and many are beyond our control. Some risks may be unknown to us, while other risks currently believed to be immaterial could turn out to be otherwise. Our business, financial conditions, results of operations and prospects could be materially and adversely affected by any of these risks. Therefore, we aim to mitigate the exposures through an appropriate risk management and internal control system.
| Types of Risk | Description | Mitigation Efforts |
|---|---|---|
| Outbreaks of Livestock Diseases | Livestock disease outbreaks pose serious risks to animal health, resulting in widespread illness and mortality of livestock, decreased productivity, and significant financial consequences. | Management mitigated disease outbreaks or other biological hazards risks by deploying an internal biosecurity policy and implementing biosecurity measures across our farms, ponds and production facilities |
| Fluctuation in Raw Material Price | Corn and soybean meal (SBM) are the primary components of production for animal feed. Market prices for these commodities can fluctuate due to weather, harvest sizes, supply chain, trade war, storage costs, government policies, foreign exchange rates, and other factors. As a result, failure to effectively manage exposure to price increases or supply shortages could harm our financial performance. | We purchase our corn locally and dry it in our dedicated facilities before storing it in warehouses or silos. When it comes to imported SBM, our Commodity Sourcing Specialist actively monitors price fluctuations, allowing us to seize opportunities to buy at lower prices from international traders while also storing the product in our warehouses or silos. |
| Foreign Exchange Rate Fluctuations | We buy SBM in US dollars and sell feed in Indonesian Rupiah. As a result, our feed business is vulnerable to fluctuations in the USD/Rupiah exchange rate. | We monitor and hedge our foreign exchange risk within the scope of Bank Indonesia regulations. |
| Business Competition | We face competition from other Indonesian producers in the domestic market in which we sell our products. In addition, large international producers may seek to penetrate the Indonesian market in the future. Key factors affecting our competitiveness include price, product quality, brand identification, breadth of product line, distribution reach and customer service. Increased competition may result in price reductions for our products and a loss of market share, greater volatility in our revenues, and damage to our reputation which may in turn have a material adverse effect on our business, financial conditions, results of operations and prospects. | We exclusively use the Indian River breeds, which are specially tailored for tropical climate conditions, particularly in relation to tolerance of heat, humidity and resistance to disease. Therefore, our farmers benefited from lower cost resulting from lower mortality, better growth rates and better feed-toweight conversion ratios. As part of our integrated operations, we can provide feed and DOC to provide a complete package of services and products to our farmers and support them with technical advice to improve productivity. In addition, since Indonesia is a Muslim-majority country, our slaughterhouses, food processing facilities and distribution channels are “halal” certified according to religious requirements. |