Dairy farmers want increase in milk price

Yuli Tri Suwarni, The Jakarta Post, Bandung

After being in the dairy business for over 10 years, the thought to switching to another business has started to cross Yayat Ruchiyat's mind.

It's not that this resident of Sukanagara village in Pagerwangi, Lembang, hates his job. It's just that this year is the worst his business has ever been. Unchanging raw milk prices -- Rp 1,800 (19 U.S. cents) per liter -- simply cannot cover his production costs.

"The price of jukut (grass) is now very expensive, not to mention many other things. Selling the milk to the cooperative can't cover production costs," the owner of 11 dairy cows told The Jakarta Post.

Yayat said that he currently has to pay Rp 55 per kilogram for grass, and up to Rp 600 per kilogram for concentrate -- a high protein food supplement for lactating cows composed of wheat, tofu waste or tapioca waste.

Previously, he could get grass anywhere in Lembang for free, while a kilogram of concentrate only cost Rp 300.

Meanwhile, however, the price of milk paid to farmers has remained constant over the last five years, he said.

Every day, one cow eats at least 50 kilograms of grass and 7.5 kilograms of concentrate.

However, although all cows eat the same amount of feed, their milk production varies.

On Yayat's farm, for instance, only four of his cows are actually producing milk, at 50 liters per day.

If the total solids in the milk he produces meets a minimum standard, then the cooperative will pay him Rp. 1,800 per liter.

Thus, assuming Yayat's milk meets the required standard, he will receive a total of Rp 90,000 per day, almost the same amount of money he had to spend on providing grass and concentrate.

"What do I get in return?", he sighed.

He said he could only earn a profit from cattle trading and breeding, since he could no longer solely rely on milk production.

According to the North Bandung Dairy Farmers Cooperative there are around 4,200 dairy farmers in Lembang, with total livestock of some 14,000 head, of which about half are producing milk.

"Lembang milk is actually the most expensive because it has the highest quality in West Java. But the Rp 1,800 price is just not right for farmers," said head of the cooperative, Dedi Setyadi.

The cooperative itself, he said, sold the milk to processing companies for Rp 2,050 per liter, a markup of 15 percent to cover handling and other costs.

The markup, he added, is used to provide veterinary health services as well as providing guidance for farmers on how to improve quality.

But the quality of milk is currently decreasing, he said, because many farmers are spending increasing amounts of time on other jobs to cover their rising living expenses, and thus could not focus on their dairy herds.

The Indonesian Milk Cooperative Union in West Java recently called for an increase in the price of raw milk to help traditional dairy farmers survive.

The union's West Java secretary general, M. Nasrum, claimed that over 34,000 dairy farmers in the province might go out of the business.

The problem was recently brought up at the West Java cooperative office. "We want the price (of raw milk) to be increased to Rp 2,300 per liter," Nasrum said.

He said that since 1979, 90 percent of milk production in the province went to six milk processing companies -- PT Ultra Jaya, PT Indomilk, Bendera, Daimen, Indolakto and Formos.

However, he claimed that a lack of government protection meant that processing companies preferred to use imported milk (75 percent) as compared to local milk (25 percent).

Dedi, who has been in the dairy business for many years, said that since the government signed a MOU with the IMF in 1998, the national milk evaluation team was dispersed. The team, he said, was in charge of evaluating local milk prices twice a year, in April and October.

The new policy, he said, has put pressure on dairy farmers as milk processing companies are no longer required to increase their usage of local milk.

"In 1984, there was a regulation that compelled milk processing companies to take local milk, with composition ratio being from 8:1 to 1:1. But now, that regulation is history," Dedi said.

One of the milk processing companies, PT Ultra Jaya, recently increased their raw milk price by Rp 100 per liter.

"We welcome the increase, but we also need government protection," Nasrum said.