Build the Milk Market in Indonesia

The ministry needs to create milk supplement programs for school children which uses locally produced fresh milk. Especially since the nutritional contents of fresh milk is much higher compared to powdered milk.
Such programs must be supported with the reactivation of three milk processing factories owned by the cooperative, which are still not producing until now. These factories could be used to produce ultra high temperature (UHT) milk, sweet condensed milk, and pasteurized milk. “The inbuilt capacity of the milk factory in Java is about 200 tons per day,” said Teguh.
Milk supplement programs for schools could also reduce the lost generation effect and gradually reduce dependency on five large milk processing companies incorporated in the milk processing industry (IPS).
The Ministry of Agriculture also needs to put the policy on regulation of milk import volume through scheduling into action. This would encourage the IPS to use domestic fresh milk for their industry.
“This is possible because import permits are issued by the Ministry of Agriculture,” said Teguh who also said that import tax for milk should be returned to 5 percent or even better raised to 10 percent.
Last Tuesday the Minister of Agriculture said the President has instructed him to build the dairy industry and small to medium scaled milk industries.
So far, the domestic fresh milk market is very dependent on IPS; hence farmers and cooperatives have very weak bargaining power.
In the last five months, the IPS has lowered the purchasing price for raw milk twice. Despite strong objections from farmers and cooperatives, the IPS still lowered its purchasing price and there was nothing the government could do to protect farmers.
Currently the domestic fresh milk production is about 1.3 million liters per day. Around 90 percent of the domestic production is supplied to the IPS. Unfortunately domestic production could only cover 20 percent of the total domestic demand for milk; the remaining 80 percent is imported with an annual value of 9 trillion rupiahs.

Productivity
President Director of PT Green Global Multifarm Lestari, Poltak Sitinjak, said the problem faced by local dairy farmers is lack of capital and low productivity because of the cow’s low quality. Therefore, current dairy cows need to be replaced with better quality cows.
“But, there are many challenges and complexities in acquiring a permit to import cows, starting from the regional government until the Directorate General of Livestock. Import permits said to be finished in 14 days could actually take up to two months, including added complications in obtaining a permit from the Agriculture Quarantine Agency,” said Poltak.
A stimulus for cow breeding in the form of subsidized credits is very helpful. But, the program is not well socialized, banks often don’t know when asked, making farmers more troubled.
Lately, it was said that the platform for subsidizing cow breeding credits was only 65 million rupiahs.
“Why not try to build a large scale breeding industry, for example up to 1000 cattle,” said Poltak whom in April 2009 had imported 200 dairy cows through Soekarno-Hatta Airport, Tangerang.
“Of course there needs to be tight supervision on who gets the credit,” he said.
Another serious problem is market guarantee, that the milk produced will be bought and also at a good price. If not, people will use their dairy cows as beef cattle istead. (MAS)
Source : Kompas