Investment of Rp 3.25 trillion ($329 million) in milk production at the farm level is urgently needed, with fresh domestic milk only accounting for about 13 percent of the country’s total milk market, according to a senior government official.
Zaenal Bachruddin, the Agriculture Ministry’s director general of product processing and marketing, said that investment opportunities in the milk sector would continue to be available for some time.
“We need an investment of at least Rp 3.25 trillion to provide dairy cattle, electricity and enough clean water to produce and market high-quality fresh milk,” Zaenal said on Monday.
Average consumption of fresh milk in Indonesia is extremely low due to high costs.
“Although it contains more protein than processed milk, fresh milk is not affordable to most Indonesians. Neither can it be stored for a long time,” Zaenal said.
On average, Indonesians only drink 10 liters of fresh milk per capita per year, which is low compared with Malaysia, where people consume 15 to 20 liters of the product per year.
“People in some countries in Europe drink as much as 80 liters of fresh milk per year,” Zaenal said.
Instead of fresh milk, many Indonesians drink processed milk products, such as milk powder and sweetened condensed milk. The cost of fresh milk, Zaenal said, was closely related to the small size of the country’s dairy herd.
At present, there are about 374,000 dairy cattle raised by 127,211 farmers across the country.
“Most of the dairy farmers have only between two and three cattle, while ideally each farmer should have between 6 and 10,” Zaenal added.
Dedy Setiadi, chairman of the Indonesian Dairy Cooperatives Association (GKSI), said dairy farmers’ difficulty in accessing bank loans had left them unable to expand their businesses, such as by buying more cattle.
“The banks have never accepted cattle as collateral,” Dedi explained.
He urged the government to intervene so as to encourage the banks to provide loans to dairy farmers.
“With loans, farmers could increase the number of their cattle. To date, however, the sector has been shunned by the banks.”
Based on figures from the Ministry of Trade, Indonesia needs about 2.4 million tons of fresh milk annually.
However, in 2008 the country was only able to produce 574,400 tons, accounting for about 24 percent of national demand. The remaining 76 percent, or more than 1.8 million tons, must be imported, mostly from Australia or New Zealand. Much of this is in powdered form.