August 7, 2007
Melancholic run for Indonesia milk production this year
Despite good economic forecast for 2007, milk output in Indonesia will remain in the doldrums this year due to poor genetics and inefficient local production, according to the US Department of Agriculture in its "Indonesia Dairy and Products Annual 2007" report.
Fresh milk production will remain stagnant at 1.2 million litres per day which meets 25 percent of Indonesian demand for milk. However, processed milk is seen to grow as imports of non-fat dry milk are estimated to increase by 9.5 percent to 161,000 tonnes on strong demand while imports of milk powder are seen on par at 27,000 tonnes in 2008.
High price of powdered milk in the international market has tightened the competition among the major Indonesian dairy processing companies to get their fresh milk from cooperatives, the USDA said.
The country's centre of milk industry is in West Java but it was taken over by East Java in 2004 when prices of beef soared, thus, farmers receiving more from culling their dairy cattle for beef as against looking for cattle for milk, reports the USDA. West Java currently produces 400,000 litres of milk while East Java produces 600,000 litres.
The USDA says the quality of Indonesian milk also remains low as measured by bacteria content ranging from 500,000 to 1 million per millimetre. Most of the Indonesian fresh milk is combined with non-fat dry milk to produce full cream liquid and powdered milk. Fresh milk with higher TPC (total plate count, the unit gauging bacteria content) is used to produce sweetened milk condensed milk. But efforts to improve milk quality and production are hindered by some problems and the USDA outlined these as: low level of farmer education, small size of farms, poor farming and hygiene practices, scarcity of water and land and the lack of incentives for farmers.
Consumption, however, is seen to rise by 6 percent in 2008 and per capita consumption is estimated to hike by 7.7 kilograms per year in 2007 due to increased awareness of the health benefits of milk, states the USDA. But high prices of milk in the international market have forced the industry to spike domestic prices by up to 20 percent at the end of this year. This situation has consumers switch to soymilk which is priced lower and easily found in supermarkets and on street vendors.
As of April 2007, consumption of liquid milk, powdered milk and sweet condensed milk has grown by 20 percent, 10 to 12 percent and 20 percent respectively.
Since EU and Australia have been hit by drought, milk supply is dominated by the United States, particularly of non-fat dry milk and whey powder. However, given the long historical presence in Indonesian market as well as its strategic proximity, Oceania and the European Union still holds 60 percent of the market share while US holds 30 percent.
PRICE
|
Product |
Price |
Price |
|
(IDR) |
(USD) | |
|
Local fresh milk Grade 1 |
3,047/kg |
336/ton |
|
(farm gate - 12% TS, 0 - 250,000/ml TPC) | ||
|
Local fresh milk Grade 2 |
2,947/kg |
325/ton |
|
(farm gate - 12% TS, 250,000 - 500,000/ml TPC) | ||
|
Local fresh milk Grade 3 |
2,847/kg |
314/ton |
|
(farm gate - 12% TS, 500,000 - 1 million/ml TPC) | ||
|
Whole Milk Powder |
5,200/ton | |
|
Non Fat Dry Milk |
4,100/ton | |
|
Whey (CNF) |
2,000/ton |
Note: Exchange rate: Rp. 9,072/USD1 as of July 2007.
