Cooperatives told to run milk processing plants

Cooperatives told to run milk processing plants

JAKARTA (JP): President Soeharto yesterday told milk cooperatives to build their own milk processing plants to guarantee the continual absorption of their products.

"Cooperatives should initiate their own milk processing units," Soeharto was quoted by chairman of the Indonesian Cooperatives Council, Sri Edi Swasono, as saying at his Jl. Cendana residence.

The government currently still imposes the compulsory procurement of domestic fresh milk by milk processing companies to protect the country's dairy industry.

Every milk processing company is required to acquire a recommendation letter from the Association of Indonesian Milk Cooperatives, which confirms that the company has procured a certain portion of domestic fresh milk before importing milk powder.

A number of milk exporting countries, including New Zealand and Australia, had requested that Indonesia change the compulsory requirement, which is considered to be a non-tariff barrier, into a tariff barrier as mandated by the World Trade Organization.

The government has said that it will protect the country's diary industry until it is ready to be liberalized under the provisions of the trade organization.

Sri Edi said that milk cooperatives, for the time being, are not ready to heed President Soeharto's call as they do not have the capacity to establish their own milk processing plants.

Therefore, Sri Edi said, milk cooperatives are encouraged to cooperate more closely with existing milk processing plants.

Indonesia produces over 400,000 tons of fresh milk annually, most of which is absorbed by the country's five largest milk processing companies -- Nestle, Frischevlag Indonesia, Indomilk, Ultra and Sari Husada.

At yesterday's meeting with the cooperatives council, President Soeharto praised Nestle for being the largest local milk absorber. (rid)