New Zealand-based milk producer Fonterra Group says it is unlikely to invest in processing facilities in Indonesia as the climate and environmental conditions are less than ideal for breeding cows and milk of its desired standards.
"We choose to expand our investment in countries which have cooler climates, such as China, Australia and North America," managing director for Asia, Middle East and Africa, Mark Wilson said Tuesday.
He said in those countries there was no need to spend extra money feeding the cows as grass was always abundant. In Indonesia, most cow farmers have to buy grass to feed their cattle.
"It doesn't mean that we are closing the door on investment here, but efficiency is still our main consideration," he said.
The multinational company was established by groups of farmer cooperatives comprising 11,600 cow farmers. It produces milk for the Anlene, Anmum and Boneeto brands.
It also supplies butter and other milk-based products to international food companies, such as Pizza Hut and Bread Talk.
Fonterra Brands Indonesia president director Maspiyono Handoyo said the company's investment in the country was in the form of marketing, not in processing.
"We cooperate with local industry in processing the raw materials, most of which are still imported," he said.
According to Maspiyono, Indonesia is one of the biggest Fonterra markets in Asia and the Middle East despite a milk consumption rate that is lower than other countries.
He declined to provide the company's exact market share here.
Last year, Indonesia's milk consumption reached nine liters per capita, up from 7.7 liters a year earlier. That is still lower than in the Philippines, China, Malaysia and Thailand.
However, Maspiyono is optimistic the national market for milk had a bright future, as it is projected to grow by 13 percent annually.