RECENT DEVELOPMENT OF DAIRY INDUSTRY IN INDONESIA

Adiarto

Staff of Laboratory of Dairy Science and Industry Universitas Gadjah Mada Yogyakarta Indonesia

Paper presented on the workshop of C0mpetitive Dairy Cattle Chains in Southeast Asia December 8-9, 2010, Muak Lek, Saraburi, Thailand

Introduction

Indonesia with more than 200 million people becomes one of developing country that

start Improving its living standard with the focus on increasing consumption high quality food,

namely from animal product origin, such as milk, meat, and eggs. Recently, Indonesia is only

25% self sufficient on milk or equal to 679.200 ton of milk produced per year by the farmer and

the rest must be fulfilled by importation in form of skim milk powder, whole milk powder, and

milk anhydrous milk fat. Improvement of living standard as well as better education of people

followed by the increasing of milk consumption, hence make greater national demand of milk.

Indonesian is recognized as a biggest consumer of milk powder in the world and through

the packaging of milk recombine technology, the vary of recombine milk products are available

in the market. According to Department of Industry Republic Indonesia (2008), the consumption

of fresh milk in Indonesia is very low close to only 18%, far lower comparing to India (98%),

Thailand (88%), and China (76.5%). Suggestion from some food nutritionist and dairy

technology experts, that milk consumption ideally must from pasteurized fresh milk rather than

milk powder to get more nutritive value of milk.

The sharing of national fresh milk production on national milk demand shows a

continuously decreasing trend from year 2003 to 2007 as indicated in Table 1. below

Table 1. Sharing of Fresh Milk and Imported Milk Toward Milk Consumption

2003 2004 2005 2006 2007

National Population of People

(Million)

215 218 220 222 224

Fresh Milk Production (000 Ton) 466,50 463,60 451.80 519.70 536.90

Net Milk Import (000 Ton) 967.55 1.605.22 1.594.20 1.804.60 1.808.40

Milk Consumption (kg/capita/year) 6.67 9.49 9.30 10.47 10.47

Total Consumption (Ton) 1.434.05 2.068.82 2.046.10 2.324.40 2.345.30

% Fresh Milk Toward Consumption 32.50 22.40 22.10 22.40 22.90

% Milk Import Toward Consumption 67.50 77.60 77.90 77.60 77.10

Source : Department of Industry (2008)

Table 1. above shows that even the consumption of milk is still low, but importation of

milk tend to increase continously from year to year to fulfill the national need. When the

performance of national dairying does not able to be improved significantly and the milk

production remain stable, the dependency of milk on import will be greater and greater and self

sufficiency on milk becomes lesser and lesser , and finally Indonesia is going to be faced on

food trap.of milk.

Challenging of Milk Industry In Indonesia

There are three important issues that influence the performance of dairy industry in

Indonesia as follows :

1. Low productivity of dairy animal

Since 1979 the dairy industry in Indonesia has been implemented using Holstein

Friesian (HF) as foundation stock through importation in huge amount mostly from Australia and

New Zealand. The choosing of those kind of beed like other Southeast Asia countries as well,

is based on simple idea that HF breed is one of breed could easily adapt in the tropical

environment, as well as high milk producer. In fact, that tropical area with high air temperature

and humidity actually physiologically is not really suitable for HF as temperate breed origin. A lot

of problems have been especially faced by the backyard dairy farmer, at least the production

performance of their own cows are very low, with average of milk production 8-10 litre per day

or less than 3.000 litre/lactation and still accompanied by low reproduction performance of

animal.

HF as a high producer dairy cattle breed, physiologically has high metabolic rate to

serve the metabolizable nutrients needed for some kind of physiology activities, more special at

the begining of lactation. As a consequency, high nutrient requirement of cow will be followed

by increasing feed consumption and production of metabolic heat , hence increase heat load of

the animal body . To maintain normal body temperature of cow, heat load should be dessipated

with efficient way through presenting of significant gradient temperature between surrounding

air temperature and temperature of animal body. High temperature followed by high humidity in

tropical humid area become serious problem for animal in dissipating their body heat load and

causing heat stress condition of animal (Van Den Berg, 1990). That is way using of temperate

dairy breed raising in tropical area will exposure a lot of problems related to lower performance

of the cow, moreover they are managed by backyard dairy farmer.

2. Quality of human resources of farmer

Dairy industry in Indonesia is backboned by backyard dairy farmer, which mostly are not

well-educated or unskill people with little land ownership as well as belongs to the weak

economic group of people. This development of backyard dairy farmer program at the beginning

has been implemented by simply design, namely to generate employment and growing

economic activities in rural area, and reducing import of milk. Even dairying in Indonesia has

already more than 30 years existed, therefore the performance of most dairy farmers have not

significantly well improved.

The management of dairy cow is very complex, farmers should understand the

physiology process of dairy cattle to serve a proper management menu. Milk cooperative is a

responsible institution in composing appropriate technology for farmer. Skillful human resources

should be available to formulate easily technology that later practiced by farmers and should

continously updated when a new technology available. Successful of a milk cooperative in

encouraging dairy farmers to practice standard management become the first priority of duty.

Except technology, a milk cooperative must serve production inputs such as high quality feed,

AI service, and health service program.

3. High demand of milk

According to the report of USDA Foreign Agricultural Service (2009) because of

economic growth of Indonesian people at level of 5.5 percent in 2010, combined with a stable

political outlook, and a growing awareness of the health, the national demand of milk will

dramatically increased. The national production of fresh milk in year 2008, 2009 are 1.2 million

liter/day (48.000 metric tons), and 1.3 million liter/day (56.000 metric tons) respectively and it

fulfills only 25 percent of national demand even with average milk consumption of 10.3 kg/capita

annually, relatively lower than other Asean countries. Growth in domestic fresh milk production

will remain limited because of several fundamental factors such as limited farmer education,

high price of dairy cattle feed, poor farm management practice, limited access to high-quality

genetics, limited access to bank loans etc.

Planning Program

There are some important issues in corresponding the government to improve the

performance of dairy industry in Indonesia as follows :

1. Toward increasing self sufficiency of milk

The higher and higher demand of milk realizes the government to improve performance

of national dairy industry to meet 50% milk self sufficient in 2014. Therefore, the government of

Indonesia support 200.000 heads of dairy cattle within the next five years by issuing the Ministry

of Finance Decree on loan for breeding dairy cattle. The decree provides a five percent loan

subsidy given from the government to any businessman as well as eligible milk cooperatives

who expect to purchase dairy cattle.

2. Toward Improvement of milk marketing

About 90% of milk produced by the dairy farmers is absorbed by Milk Industry Plan and

the rest is sold in the free market or processed in form of pasteurized milk by cooperative. The

government is looking for added value of milk through developing of milk processing program.

The government try to build up the medium scale of Milk Industry Plan that operationally will be

done by milk cooperative or other medium scale private company. Beneficeries of this program

are (1) the consumption of healthy fresh milk will increase, (2) increase added value of milk, it

means the dairy farmer will receive more money, and (3) the milk marketing is not going only in

one market system, but will appear other competitors.

References

Indonesian Ministry of Industry, 2008.Development model of policy on Milk Processing Plan. Directorate General of Agriculture Industry and Chemical

Dairy and Products Annual, 2009. Gain Report, USDA Foreign Agricultural Service.s and subtropics

Van den Berg, J.T.C. Strategy for dairy development in the tropics and subtropics, 1990. Pudog Wageningen