INDONESIA DAIRY INDUSTRY DEVELOPMENT Presented by: Dr. Ir. Arief Daryanto, MEc Director, Graduate Program of Management and Business IPB and Senior Lecturer, Department of Economics, FEM-IPB Seminar on Update Dairy Industry, Food Review, June 21, 2012 IPB International Convention Center, Bogor
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INDONESIA DAIRY INDUSTRY DEVELOPMENT
Presented by: Dr. Ir. Arief Daryanto, MEc
Director, Graduate Program of Management and Business IPB and
Senior Lecturer, Department of Economics, FEM-IPB
Seminar on Update Dairy Industry, Food Review, June 21, 2012 IPB International Convention Center, Bogor
Presentation Outline : • Introductory Remarks
• Current Situation of Dairy Industry in Indonesia
• Key Drivers for Dairy Development
• Government Policies on Dairy Development
• Concluding Remarks
Introductory Remarks
Checkoff Program: Got Milk?
Current Situation of Dairy Cow Industry in Indonesia
Figure 1. Current Worldwide Total Milk Consumption Per Capita
Table 1. Current Worldwide Total Milk Consumption: Where is Indonesia’s Position?
No Country Milk Consumption (000 tonnes)
2007 2006 2005 2004 2003 2002 2001
1 India 80,040.90 77,105.60 73,895.62 70,842.84 68,084.87 66,360.58 66,078.34
2 United States of America 78,342.86 76,342.48 76,896.32 76,007.52 76,421.70 76,331.76 74,753.57
3 China 38,354.33 35,848.09 31,218.86 26,834.22 21,719.60 17,334.36 14,282.55
Table 6. Dairy Cattle Population, 2007-2011, by Province, Number of Head
Dairy Cows Number
Dairy Cows (Percent)
Milk Production (Tonnes)
Milk Production (Percent)
East Java 296.262 49,6 536.458 57,9
Central Java 149.931 25,1 100.350 10,8
West Java 139.973 23,4 268.042 29,0
Other 10.963 1,8 20.925 2,3
TOTAL 597.129 100 925.775 100
GKSI
Table 7. Dairy Cows Population and Milk Output by Main Provinces, 2011*)
Source : Statistik Peternakan 2011 *) Preliminary Figures
Table 8. Fresh Milk Production 2005 – 2011, by Province, in tonnes
Source :www.ditjetnnak.go.id
Table 9. Milk Productivity by Major Provinces, 2009
Province
Dairy Cattle
Productive of Female (percent)
Productivity / head / year (Lt)
North Sumatera 67,69 2.040,00 West Sumatera 50,00 1.920,00 South Sumatera 88,71 2.521,75 Bengkulu 50,00 1.911,00 Lampung 50,00 1.620,00 Jakarta 88,54 2.032,83 West Java 66,93 3.891,45 Central Java 57,02 2.021,62 DI Yogyakarta 68,42 3.336,63 East Java 57,33 2.953,96 South Sulawesi 58,84 2.284,80 Indonesia 60,70 3.069,36
Key Driving Forces For Dairy Development in Indonesia
• Increased demand for dairy products è Population growth, income growth, increasing middle class, urbanization, longer life span and ageing population
• Diversification toward high-value production - a demand-driven process in which the private sector plays a vital role
• Food spending is shifting from grains and staples to vegetables, fruits, meat, dairy, and fish
Key Driving Forces in Dairy Industry(1)
• Demand for ready-to-cook and ready-to-eat foods is also rising, particularly in urban areas.
• Technology change/transfer – Improved technologies è shorter production cycle, lower feed-conversion ratio
• Food security and improved nutrition
• Import substitution or export (foreign exchange earnings)
Key Driving Forces in Dairy Industry (2)
Figure 6. Primary Drivers
SOURCE: FAO World Food and Agriculture to 2030/2050; FAO Expert MeeAng on How to Feed the World in 2050
~1.5 X more cereals
~2 X as much meat
• UrbanizaAon – 70% of 2050 populaAon
• Higher calorie consumpAon and diet shiQs – more protein, more wealth
• “Middle Class” income & populaAon increasing substanAally
1 On a per-day basis, global food consumption is ~17 trillion Kcal in 2000, ~18 trillion Kcal in 2005, and ~28 trillion Kcal in 2050 2 From ~475 to ~892 million tons of dairy, ~1 to ~1.44 billion tons of cereals, ~227 to ~464 million tons of meat, over the period of 2000 to 2050
~2 X as much dairy
Figure 7. Per Capita Consumption of Selected Food Commodities in Developing Countries (index 1961=100)
Source :FAOSTAT
Figure 8. Per Capita Income and Dietary Energy Intake From Dairy
Several Issues in Dairy Development in Indonesia (1)
• Scarcity of forage and high price of dairy cattle feed and concentrates
• Small farm size and scarcity of land at suitable elevation for dairy cattle farming
• Low dairy cow productivity – with an average of about 10 liters of milk per cow per day
• Low farm profitability due partly to low milk yields
• Low milk quality with only 12 percent of milk production meeting the minimum standard
Source: GAIN Report, 2009
Several Issues in Dairy Development in Indonesia (2)
• Poor farm and herd management practices
• Lack of technology for milking and processing of fresh milk
• Limited access to high – quality genetics
• Limited access to finance and bank loans
• Limited farmer education
Source: GAIN Report, 2009
Some Policy Initiatives
1. BUSEP (Bukti Serap – Absorption Proof) scheme implemented in the period of 1982-1998. This policy is found to be not significant in increasing the productivity of Indonesian dairy products.
2. The Blue Print The blue-print is started by portraying the existing condition of
Indonesia dairy industry by identifying its strengths and weaknesses. Six generic groups of strategies have been formulated by matching the SWOT factors. (a) Human resource and institutions development, (b) Increasing the number of population and productivity, (c) Quality and hygiene assurance, (d) Price and welfare of the farmers, (e) Increasing fresh milk consumption, and (f) Improving the infrastructures
3. Government encouraging domestic and foreign companies to invest in dairy farming and dairy breeding to meet local demand.
4. Government provides credit facilities with subsidised interest for small dairy farmers for purchasing dairy cows.
5. Coordination with GKSI (Indonesian Milk Cooperation Organisation), the Ministry of health and the Ministry of Education and Culture to create milk market directly to the students è School Milk, School Children Food Supplement Program (PMTAS).
6. Regional government initiatives to promote more milk consumption for school aged children è GERIMIS BAGUS (Gerakan Minum Susu Bagi Anak Usia Sekolah)
7. Through P2HP (Directorate General of Agriculture Processing) and Ministry of Industry built facilities for milk processing in many milk collecting unit closed to the farmers è Cluster program.
8. Training and education for farmers on dairy farming management, milk processing and market.
9. Diary Board has been established, but it is still not very active è Introduction of levy?
Major Goals of Blue Print • Self-sufficiency in milk production to increase from 25-30
percent to 50 percent in 2015 • Expansion of dairy production in suitable areas outside
Java, especially Sumatera and Sulawesi • Milk production per cow to increase from 8-10 kg cow/day
to 15 kg per cow/day (in 2015) • Calving interval to be reduced to 13 months • Milk quality to be improved from 12 percent of total milk
that meets the SNI standards to 20 percent meeting the SNI standards in 2015
• To ensure dairy farming remains feasible from an economic point of view, the minimum milk price to be kept at a level of at least 80 percent of world market prices.
The 50% self-sufficiency?
• The policy objectives show the interest of GoI to increase milk production, through improving efficiency of farm management and expansion of milk production, as well as to improve milk quality.
• The goals however are ambitious given the limited time?
The 50% self-sufficiency?
• Policy instruments include among others (a) financial support to farmer groups (subsidies of Rp 300 million per group), (b) provision of free services, like AI services and animal health services, and (c) advice to farmers (through) local governments.
• As feed resources on the farms are limited, increasing milk production by expansion of the dairy herd may conflict with the goal to increase the milk production per cow.
Concluding Remarks
Happiness is when what you think, what you say, and what you do