9 additional paper_adiarto-recent_development_of_dairy_industry_in_indonesia


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On December 8 and 9, a Dairy Expert Roundtable Meeting on “Competitive Dairy Value Chains in Southeast Asia” was held in Muak Lek, Thailand. In this regional meeting, participants from six countries in Southeast Asia discussed how the relatively small dairy value chains could be more competitive and sustainable.

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9 additional paper_adiarto-recent_development_of_dairy_industry_in_indonesia

  1. 1. 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, ThailandIntroduction Indonesia with more than 200 million people becomes one of developing country thatstart 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 only25% self sufficient on milk or equal to 679.200 ton of milk produced per year by the farmer andthe rest must be fulfilled by importation in form of skim milk powder, whole milk powder, andmilk anhydrous milk fat. Improvement of living standard as well as better education of peoplefollowed 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 throughthe packaging of milk recombine technology, the vary of recombine milk products are availablein the market. According to Department of Industry Republic Indonesia (2008), the consumptionof 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 dairytechnology experts, that milk consumption ideally must from pasteurized fresh milk rather thanmilk powder to get more nutritive value of milk. The sharing of national fresh milk production on national milk demand shows acontinuously decreasing trend from year 2003 to 2007 as indicated in Table 1. below
  2. 2. Table 1. Sharing of Fresh Milk and Imported Milk Toward Milk Consumption 2003 2004 2005 2006 2007National Population of People 215 218 220 222 224(Million)Fresh Milk Production (000 Ton) 466,50 463,60 451.80 519.70 536.90Net Milk Import (000 Ton) 967.55 1.605.22 1.594.20 1.804.60 1.808.40Milk Consumption (kg/capita/year) 6.67 9.49 9.30 10.47 10.47Total 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 77.10Source : Department of Industry (2008) Table 1. above shows that even the consumption of milk is still low, but importation ofmilk tend to increase continously from year to year to fulfill the national need. When theperformance of national dairying does not able to be improved significantly and the milkproduction remain stable, the dependency of milk on import will be greater and greater and selfsufficiency on milk becomes lesser and lesser , and finally Indonesia is going to be faced onfood trap.of milk.Challenging of Milk Industry In Indonesia There are three important issues that influence the performance of dairy industry inIndonesia as follows :1. Low productivity of dairy animal Since 1979 the dairy industry in Indonesia has been implemented using HolsteinFriesian (HF) as foundation stock through importation in huge amount mostly from Australia andNew 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 tropicalenvironment, as well as high milk producer. In fact, that tropical area with high air temperatureand humidity actually physiologically is not really suitable for HF as temperate breed origin. A lotof problems have been especially faced by the backyard dairy farmer, at least the productionperformance of their own cows are very low, with average of milk production 8-10 litre per day
  3. 3. or less than 3.000 litre/lactation and still accompanied by low reproduction performance ofanimal. HF as a high producer dairy cattle breed, physiologically has high metabolic rate toserve the metabolizable nutrients needed for some kind of physiology activities, more special atthe begining of lactation. As a consequency, high nutrient requirement of cow will be followedby increasing feed consumption and production of metabolic heat , hence increase heat load ofthe animal body . To maintain normal body temperature of cow, heat load should be dessipatedwith efficient way through presenting of significant gradient temperature between surroundingair temperature and temperature of animal body. High temperature followed by high humidity intropical humid area become serious problem for animal in dissipating their body heat load andcausing heat stress condition of animal (Van Den Berg, 1990). That is way using of temperatedairy breed raising in tropical area will exposure a lot of problems related to lower performanceof 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 notwell-educated or unskill people with little land ownership as well as belongs to the weakeconomic group of people. This development of backyard dairy farmer program at the beginninghas been implemented by simply design, namely to generate employment and growingeconomic activities in rural area, and reducing import of milk. Even dairying in Indonesia hasalready more than 30 years existed, therefore the performance of most dairy farmers have notsignificantly well improved. The management of dairy cow is very complex, farmers should understand thephysiology process of dairy cattle to serve a proper management menu. Milk cooperative is aresponsible institution in composing appropriate technology for farmer. Skillful human resourcesshould be available to formulate easily technology that later practiced by farmers and shouldcontinously updated when a new technology available. Successful of a milk cooperative inencouraging 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 ofeconomic growth of Indonesian people at level of 5.5 percent in 2010, combined with a stable
  4. 4. political outlook, and a growing awareness of the health, the national demand of milk willdramatically increased. The national production of fresh milk in year 2008, 2009 are 1.2 millionliter/day (48.000 metric tons), and 1.3 million liter/day (56.000 metric tons) respectively and itfulfills only 25 percent of national demand even with average milk consumption of 10.3 kg/capitaannually, relatively lower than other Asean countries. Growth in domestic fresh milk productionwill 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-qualitygenetics, limited access to bank loans etc.Planning Program There are some important issues in corresponding the government to improve theperformance 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 performanceof national dairy industry to meet 50% milk self sufficient in 2014. Therefore, the government ofIndonesia support 200.000 heads of dairy cattle within the next five years by issuing the Ministryof Finance Decree on loan for breeding dairy cattle. The decree provides a five percent loansubsidy given from the government to any businessman as well as eligible milk cooperativeswho 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 andthe rest is sold in the free market or processed in form of pasteurized milk by cooperative. Thegovernment 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 bedone by milk cooperative or other medium scale private company. Beneficeries of this programare (1) the consumption of healthy fresh milk will increase, (2) increase added value of milk, itmeans the dairy farmer will receive more money, and (3) the milk marketing is not going only inone market system, but will appear other competitors.
  5. 5. ReferencesIndonesian Ministry of Industry, 2008.Development model of policy on Milk Processing Plan. Directorate General of Agriculture Industry and ChemicalDairy and Products Annual, 2009. Gain Report, USDA Foreign Agricultural Service.s and subtropicsVan den Berg, J.T.C. Strategy for dairy development in the tropics and subtropics, 1990. Pudog Wageningen