Mon, 06 Jul 2009
From: The Jakarta Globe
By Teguh Prasetyo & Arti Ekawati
It is high time for the domestic dairy industry to put an end the domination of imported milk products by improving its productivity, efficiency and quality, a senior official at the National Dairy Council said on Thursday.

“The local dairy industry believes there are good prospects for expanding local capacity, with farmers here only producing about 469,000 tons of milk products a year, or 23 percent of the annual domestic market demand,” said Teguh Boediyatna, the chairman of the council, known as DPN.

With better farming practices and the expansion of herds, he said, farmers and milk processors could take the first steps toward cutting back on the use of imported milk products, which amount to 1.53 million tons a year.

“To that end, the council believes that it is necessary for farmers, cooperatives and milk processing companies to sit down together and draw up sound strategies to strengthen local milk processing firms to make the industry more competitive,” Teguh said.

He said the fact that Rp 10 trillion ($980 million) of dairy products were imported annually clearly showed the opportunities available to local farmers and dairy processing companies.

“There needs to be an integrated upstream-to-downstream strategy to put an end to the country’s dependence on imports,” Teguh said.

Currently, most farmers work in collectives, combining their three or four cows into larger herds that are then milked at stations. Collective associations then buy the milk from the farmers and sell it to large processors like PT Nestle Indonesia and PT Frisian Flag.

But productivity problems plague the industry, with processors often rejecting milk because it does not meet their standards. Knowledge of animal husbandry is also low among some farmers, leading to diseases and other health problems in herds that also affect milk levels.

Further, when prices drop on the international market, local farmers find it hard to compete with cheaper, mass-produced imports, mostly from Australia and New Zealand.

The DPN, he said, had been encouraging dairy farmers to expand their herds from an average of two cows per farmer to eight in order to increase the size of the nation’s dairy cow herd over the coming years.

“However, for any such program to be successful, the government will have to help increase per capita milk consumption, since it’s currently very low at only seven liters per family a year,” he said.

Data collected by the DPN show that there are about 130,000 dairy farmers across the country, with more than 374,000 cows producing 1.2 million liters of milk a day. East Java is the largest dairy producing centre in the country.

The council, Teguh said, has conducted a study showing that by selling milk directly to consumers, in addition to milk processing firms, farmers could increase their production and incomes.

“For example, a drink milk-healthy lifestyle’ campaign targeting households and schools would need to be funded by the government to the tune of at least Rp 364 billion per year in order to effectively promote the direct selling of milk to consumers,” he said.

Separately, Dedi Setiadi, chairman of the Indonesian Dairy Cooperatives Association (GKSI), whose 90 member cooperatives collect milk from farmers and then sell it to the processors, said that retooling and modernizing the country’s dairy processing machinery would require about Rp 800 billion this year, most of which would be obtained through loans from local banks.

“Among other things, the money would be used to improve milk processing technology for ultrahigh temperatures, pasteurized and sweet milk [condensed milk and flavored products],” he said.

Regarding farmers’ incomes, he said that the farm-gate prices for raw, or unprocessed, milk needed to be increased from about Rp 3,000 a liter to Rp 3,400 per liter.

Teguh said that in terms of quality and price, local milk was in a position to compete with imported products.

“However, farmers need to ensure a more regular and constant supply of fresh milk every day because the dairy processors currently have to import products” including powder and fresh milk, he said.

Nestle, the biggest milk purchaser in the country, said it now paid Rp 3,550 a liter to farmers for fresh milk. The company increased its price from Rp 3,150 a liter last month after farmers complained that the price was too low. International prices for milk have also increased in recent months. Syahlan Siregar, a Nestle director, said last week that the company planned to increase the amount of fresh milk it purchases from local farmers.



News Search/Filter
Transaction Rates
21 Oct 17
Buy
Sell
BTC1
80,791,277
80,791,277
Taxation Exchange Rates
31 Aug 16 - 06 Sep 16
USD 1
13,232.00
AUD 1
10,043.30
CAD 1
10,213.70
DKK 1
1,999.40
HKD 1
1,706.22
MYR 1
3,283.28
NZD 1
9,623.63
NOK 1
1,605.23
GBP 1
17,433.70
SGD 1
9,757.68
SEK 1
1,569.45
CHF 1
13,631.10
JPY 100
13,101.00
MMK 1
11.01
INR 1
197.29
KWD 1
43,920.70
PKR 1
126.23
PHP 1
285.00
SAR 1
3,528.53
LKR 1
91.12
THB 1
382.08
BND 1
9,756.53
EUR 1
14,885.50
CNY 1
1,987.61

Okusi Associates: Indonesian Business & Management Services