Indonesia may turn to Europe to import milk

JAKARTA (JP): Indonesia may soon turn to European countries to buy dairy milk as the prices offered by the country's current foreign sellers are no longer affordable, the Indonesian Association of Food and Beverages Producers has said.

The association's chairman, Thomas Dharmawan, said Friday that Indonesia, which at present buys milk from Australia, New Zealand and the United States, was looking for new sellers in Yugoslavia, Poland, the Netherlands, France and Switzerland.

He said that European milk prices were cheaper than those being offered by Indonesia's traditional sellers.

"The price of dairy milk from European countries ranges between US$700 and $1,000 per ton, (which is) much cheaper than the approximately $1,700 per ton from New Zealand," he told Bisnis Indonesia daily.

He said the plan should lower the prices here of imported fresh milk, a raw material for locally produced processed milk.

The 70 percent fall in the rupiah's value against the U.S. dollar to an average of 10,000 over the past three months from about 2,450 before the monetary crisis hit Indonesia in July has caused most imported goods, including milk products, to increase in price by about 300 percent.

According to data from the Ministry of Agriculture, Indonesia's production of fresh milk totaled around 400,000 tons last year, of which 350,000 tons were sold to local processing industries, and the remaining 50,000 tons retailed.

Local demand for dairy milk exceeded 1.1 million tons last year. Around 70 percent of this, or around 770,000 tons, was imported.

Director General of Agricultural and Forestry Products Industries Sujata said the Indonesian government would seek help from the Australian and New Zealand governments to negotiate lower milk prices with the two countries' exporters.

He feared that if prices of milk from those countries remained high, Indonesian importers would not be able afford to buy them for much longer.

Should Indonesian exporters cut their milk imports, the lower demand would certainly hurt the milk producers in those two countries, he said.

"It will be better for them to reduce their milk prices for Indonesian importers because maintaining the current prices would mean an oversupply in the two countries," he said.

He said subsidizing milk imports was not one of the government's main priorities.

Thomas said that if the government agreed to provide a subsidy, it should be given to PT Pantja Niaga, a state trading company appointed as the sole importer and distributor of the milk before the government scrapped its monopoly on Jan. 21 as part of the concessions for the International Monetary Fund- brokered US$43 billion rescue package.

Thomas said the subsidy would help small milk processing industries buy imported milk at a reasonable price from Pantja Niaga. (gis/das)