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.