Low prices squeeze dairy farmers

Low prices squeeze dairy farmers

By M.M.I Ahyani

BANDUNG (JP): A five-year-old local boy, when told his parents
could no longer afford to buy milk powder for him because its
price had soared in the last few weeks, suggested that the family
raise a milch cow so he could drink straight from its udder.

Many parents have chosen to stop buying processed milk for
their children -- given that a two-kilogram tin of milk powder is
now sold for Rp 85,000 (US$8.50), compared to Rp 30,000 seven
months ago.

Some have replaced milk with 'tajin' and fed their infants with
the glutinous liquid formed when cooking rice.

The monetary crisis has caused a drop in the amount of
processed milk currently being purchased. It has also caused
production costs for milch cow breeders to soar, while income
from factories who purchase fresh milk remains low because of
poor prices.

Some milch cow breeders are considering sending their cows to
slaughterhouses for beef, the price of which has increased
recently.

Despite the growing awareness of the benefits of milk,
national per capita milk consumption is still low. Indonesians
drink 5.1 liters per year while the French drink up to 210 liters
each, and the Germans 194 liters per year.

In 1997, domestic milch cows produced 387,000 tons of fresh
milk, meeting just over a third of the national demand of 1.1
million tons.

The chairman of the South Bandung Cattle Breeding Cooperative,
H. Aman Sulaeman, and deputy chairman of the North Bandung Milch
Cow Breeders, H. Ondi Rukmana, said there had been an increase in
demand for fresh milk from processing companies.

The increased demand meant increased incomes for farmers, but
not by enough to cover skyrocketing production costs. The
situation was confirmed by Aman and Ondi in a recent interview
with The Jakarta Post and Kompas.

Aman gave a long list of constraints, including the poor price
of fresh milk purchased by the processing factories.

Other difficulties abound for farmers, including the
relatively low production of each milch cow. A three-year-old cow
in good health can only produce, on average, 10-20 liters of milk
a day. In New Zealand, in comparison, a cow of the same breed
will produce up to 30 liters of milk a day.

The above two cooperatives bring together some 11,000 milch
cow breeders. The former, based in Pangalengan, has 7,400 members
whose cows produce 100,000 liters of fresh milk a day. The
latter, based in Lembang has 3,600 members and a daily production
level of 70,000 liters of fresh milk.

They sell most of their production to milk-processing
factories such as Ultra Jaya, Indomilk and Bendera.

Protection

Before the monetary turmoil began, milk-processing factories
purchased fresh milk from cooperatives at a basic price of Rp 702
per liter for milk with a fat content of 3.3 percent and solid
non-fat content of 7.7 percent.

The content level is known as total solid (TS) of 11 percent.
Variations on this index price will change the amount of money
paid out.

Of this price, a milch cow breeder would get Rp 650 per liter
of fresh milk in the TS 11 percent category. The remaining amount
would be used to cover the costs incurred for processing, feed
production and transportation.

Now the price offered by milk-processing factories is Rp 850
per liter for milk in the TS 11 percent category. "This means
that the increase is a mere Rp 148 per liter while production
costs have gone up much more," Sulaeman said.

He said the prices of the components of the feed needed for
good maintenance of milch cows, such as soybeans, minerals, cocoa
skins, the dregs of soybean sauce, a mixture of rice and bran,
had also risen.

Given the poor prices, some farmers prefer to retail their
milk themselves.

In Bandung, for example, a liter of fresh milk can be sold for
Rp 1,000 but fresh milk consumption in the West Java capital
stands at only 10,000 liters a day.

So, as their production levels are quite high while their milk
cannot remain fresh for long and retail sales are limited, these
breeders have no option but sell their milk to cooperatives.

Aming and Mrs. Supiyah, who rear 10 milch cows in Cisarua
village, Lembang, told The Post the price of fresh milk would
soon have to be raised.

"Every day we must make available some 50 kilograms of feed
and concentrate costing Rp 15,000-Rp 20,000. We also have to fork
out more money for those collecting grass. If each of our milch
cows gives 10 liters of fresh milk, we can get 100 liters.

"We may get Rp 60,000 from our 10 cows. Payment is made once
every 15 days. We also have to spend more money on miscellaneous
expenses. Our net income is Rp 10,000-Rp 15,000 a day. But the
cost of living is much higher now," Amingsaid.

Dedi Setiadi of the North Bandung cooperative said breeding
milch cows was profitable provided prices were not set
unilaterally by milk-processing factories.

"The potential is there and the prospects are quite bright."

To be able to tap this potential, Sulaeman called on all milch
cow cooperatives and breeders to unite to ensure the price was
not fixed.

In his opinion the proper price for a liter of milk in the TS
11 percent category was Rp 1,000.

If this price target could not be reached, he said he could
not imagine what the future of the domestic milk industry would
be because milch cows would then have been sent to slaughter
houses.

"Milch cow breeders do not want to be in the same boat as
chicken and fish breeders, who are at a loss over what to do as
their income cannot cover production costs," he said.