November 15, 2024

Indonesia relies on imports for 80% of domestic milk demand

Indonesia's Minister of Cooperatives, Budi Arie Setiadi, announced that 80% of the milk supply required to meet domestic demand is imported.

He explained that domestic production remains insufficient to satisfy the country's milk consumption needs.

According to government data, Indonesia's national milk consumption in 2022 was 4.4 million tonnes, rising slightly to 4.6 million tonnes in 2023. However, trade data presents a discrepancy, indicating consumption figures of 4.44 million tonnes in 2022 and 3.7 million tonnes in 2023.

Domestic cattle milk production, by comparison, reached only 837,223 tonnes in 2023, representing just 20% of national milk consumption. "The remaining 80% is imported," Budi Arie stated during a press conference at the Ministry of Cooperatives Office in Jakarta.

Indonesia currently has 59 milk producer cooperatives. In 2023, these cooperatives housed 227,615 dairy cattle, producing 470,000 tonnes of milk. Additionally, modern dairy farms with 32,000 cattle contributed 164,000 tonnes, bringing the total domestic production to 571,000 tonnes, according to Budi Arie.

To address the shortfall, the government relies heavily on imports. New Zealand is Indonesia's largest supplier, producing 21.3 million tonnes of milk annually. Along with Australia, New Zealand benefits from the Free Trade Agreement (FTA) with Indonesia, which eliminates import tariffs on dairy products. This arrangement makes their products at least 5% cheaper than those from other global dairy exporters.

Geographical proximity further enhances the competitiveness of Australian and New Zealand dairy products in Indonesia. However, imported milk is primarily in the form of skim milk powder, which Budi Arie noted is of lower quality than fresh milk due to the heating processes it undergoes.

The reliance on imports also affects local dairy farmers, as the price of fresh milk remains low. Currently, fresh milk is priced at IDR 7,000 (US$0.44) per litre, but Budi Arie said it should ideally reach IDR 9,000 (US$0.57) to cover farmers' costs. "Dairy farmers are losing money," he said.

The low absorption of domestic milk has sparked discontent among dairy farmers. Hundreds of farmers and milk collectors in Boyolali regency, Central Java, staged a protest against quota restrictions on milk sales to factories and milk processing industries. During the protest, participants smeared their bodies with milk to express their frustration.