Dairy Cooperatives in Indonesia

Compiled By:
Anam Batliwala Maithili Goradia Zinnia Engineer Grishma Kanuga Mohamed Tariq Latiff Lianna Mistry Vibhav Parikh 04 09 12 19 27 36 41

Earlier, each farmer has one or two cows from which the milk is sold to the middlemen. Every farmer only gets 25% of the retail price which means that the middleman is making a large profit and the farmer isn't getting his fair price. In the five year plan of 1969-1974, rural development started taking place and dairy development began as well. In the next five year plan of 1974-1979, milk production was given more attention. Yet although milk consumption was increases but the production was still 20% below the national requirement. Therefore in 1979, the National Union of Dairy Cooperatives of Indonesia wad formed which brought all cooperatives under one umbrella. This provided assistance to small farmers by imported cattle and aid infrastructure such as the technology for collecting, chilling and so on. Between 1979-1984, more aid was provided by creating and giving more jobs available to the farmers. Now through the cooperatives, the farmers who are part of the milk or village cooperatives will sell it as an agency; further they help them for collection, chilling and distribution of the milk and then sold to milk processing plants. Each farmer has now three to six cows with 85% of the farmer families are part of some cooperative union out of the ones that exist. The first dairy cooperative was established in 1962 in Pujon, Malang, East Java and other areas of Indonesia. There are 11 dairy cooperatives existed thereafter. One of the problems faced by these cooperatives was that they had to compete with uncontrolled import of cheap milk powder from private milk processing factories. Other problems that the cooperatives faced are insufficient cattle, low hygiene in farms, inadequate nutrition for cattle, low milk consumption by the population amongst others. In 1978, individuals from Indonesia to India to look at and adopt the Anand, India structure. They adopted the idea and established the Indonesia Dairy Cooperative Board under which there were 14 cooperatives. Although eventually the board dissolved, the structure remained and the cooperatives began operating as individuals. Statistics: Total milk = 2000 litres per head (per family) per year Total Dairy Cows = 495231 cows Warga Mulya Dairy Cooperative: In this cooperative, the farmers send their milk through the cooperatives which is a medium to sell their milk to wholesalers, retailers, or consumers directly. They need to follow certain standards on the basis of which their milk is collected. Standards - fat requirement: 3.3% , solid non fat:7.7% , any fluctuation of more or less than 0.1% in the standards of fat or solid non fat will cost them a penalty of 14 rupiah Prices of the milk are reviewed every 6 months technical team from the ministry of

agriculture and kept at 1280 rupiah a litre (1 rupee = 178 rupiah). The cooperatives sell the milk at 1538.3 rupiah per litre to Sai Husada Milk Processing Unit. The profit that they earned in 2000 was 490.8 million rupiah from 1.9 million litres of milk. The advantage if this cooperative is that the farmers get a routine payment of milk which is twice a month in cash. This results in regular generation of capital for the farmers.

Dairy cooperatives aid dairy farming by providing credit in kinds of cows, feed and technical service to the dairy farmers and collect milk from them and sell it to the milk processing industry. This package program known as "Cooperative Model" for the dairy industry was started in 1983. The credit activities of the dairy cooperatives was supported by credit from commercial banks at the nominal interest rate of 12% to buy dairy cows and distribute to the members. The farmers repay their credit in instalments deduce from their milk payments (Refer to diagram). With the effective implementation of this model, the dairy farming took roots in Indonesia.