Dairy farmers want increase in milk price

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.