July 28, 2011
Indonesia will not able to cut down on imported milk given the huge national demand for dairy products, which is projected to reach 10 million tonnes annually by 2020, said Deputy Trade Minister Mahendra Siregar.
Based on Industry Ministry data, national milk consumption stands at 10.47 litres per capita annually, while national milk production amounts to between 1-1.5 million litres daily, or only 30% of national milk demand. To meet the milk demand, major milk processing companies must import 70% of their fresh milk.
"Growth in the dairy industry is evident from the accumulation of gross regional product of 6.5% annually, including dairy cow population growth in Indonesia, which increases at an average of 1.6% annually," said Mahendra.
He added that besides low milk production, one of the constraints in the development of the dairy industry was the relatively low productivity of dairy cows and low quality of products, which had not yet met Indonesian National Standards (SNI), particularly in terms of bacteria content in milk.
One of the challenges faced by the dairy industry is maintaining competitiveness in facing free trade and providing products at affordable prices.
PT Nestle Indonesia president director Arsyad Chaudhry said his company would further raise the volume of fresh milk from dairy farmers in East Java, which currently reaches 700,000 litres daily, supplied by 31 cooperatives in meeting the demand of the company's plant in Kejayan, Pasuruan, East Java.
"We have continued to invest so as to meet the milk demand of the local market. After investing US$100 million this year, we will also add another US$100 million for our factory in West Java," he said.
Nestle currently absorbs 700,000 litres of milk each day from its dairy partners in East Java to be processed at its plant in Kejaan, Pasuruan. The factory will later take in 1.5 million litres of milk daily following the additional investment.
Meanwhile, East Java provincial administration is taking measures to revitalise a number of dairy production centres in the province, including offering subsidies to farmers to raise cattle population and genetics improvement to produce cattle that is resistant to weather changes.
The administration would disburse allocated funds amounting to IDR200 billion (US$23.6 million) from the provincial budget to 100,000 dairy farmers in Tulungagung, Blitar, Malang, Pasuruan, Lamongan and Tuban.