Value Chain Report: West Java

Transcription

1 IndoDairy Project Bogor Agricultural University (IPB) Value Chain Report: West Java Bogor, 9 October 2018 Dr. Sahara

2 Background Indonesia s domestic milk demand was 3.7 million ton (fresh milk equivalent) with 4.1% growth per year from 2017 to 2020 (Ministry of Agriculture 2016). The growth of national milk production is about 3% each year. The dairy market in Indonesia is still heavily reliant on imported milk products: 79% imported from overseas.

3 Overview The milk production is concentrated in Java Island which the population of cattle reached 99% of the total population in Indonesia.

4 Overview Milk production has also increased in , by 8,4 percent to reach tons in West Java Province is the second highest milk producers.

5 VALUE CHAIN STUDY

6 Value Chain West Java (Jan-Feb 2018) 17 respondents: 1. Input shops 1. Input shop of KPS Cianjur Utara 2. Input shop of KPS Bogor 2. Cooperatives 1. KPS Bogor 2. KUD Giri Tani 3. KPS Cianjur Utara 4. KPGS Cikajang 5. KPBS Pangalengan

7 Value Chain West Java (Jan-Feb 2018) 3. Milk Processors 1. Cimory 2. Frisian Flag Indonesia 3. Indolakto 4. Fonterra 4. Milk processors and retailers 1. Susu Mbok Darmi 2. Momo Milk 5. Retailers 1. Ranin Coffee 2. Narma Toserba 6. Modern retailers: Hypermart 7. GKSI

8 Value Chain in West Java

9 Value Chain Actors in West Java Value Chain Actor Input Supplier Farmers Dairy Co-operatives Milk processors Retailers Role Farm input suppliers provide feed, equipment and veterinary care for cattle. Raw materials of feed mostly are obtained from suppliers near the input shop location. The roles of farmers in the value chain are maintaining the cattle and selling fresh milk. Most of the farmers are classified as smallholder which they mostly have on average 2-3 cattle. For most farmers producing milk, dairy production is the primary source of income (80%). Linking farmers to milk processors. A cooperative gives technical and managerial skills for farmers, financial support, and market access. Milk processors transform fresh milk into some milk products such as pasteurized milk, Ultra High Temperature milk, yoghurt, cheese, and others Retailers sell the milk products to end consumers

10 Opportunities in West Java Respondents are optimist about the future of dairy industry Demand increase as income increase and health awareness Demand for derived products of milk increase yoghurt, liquid milk with taste, ice cream, etc.

11 Perception Score Coop s perception on the future of their dairy business & the national dairy sector KPBS Pangalengan KPGS Cikajang KPS Bogor KPS Cianjur Utara 4 4 KUD Giri Tani Average 3 2 6: Very positive 5: Fairly positive 4: Neutral 3: Fairly negative 2: Very negative 1: Unsure 1 0 Dairy Business Dairy Sector

12 Perception Score MPI s perception on the future of their dairy business & the national dairy sector Cimory FFI Fonterra 4 Indolakto Average 3 2 6: Very positive 5: Fairly positive 4: Neutral 3: Fairly negative 2: Very negative 1: Unsure 1 0 Dairy Business Dairy Sector

13 Perception Score SME s & Retailer s perception on the future of their dairy business & the national dairy sector Momo Milk Susu Mbok Darmi 4 Hypermart : Very positive 5: Fairly positive 4: Neutral 3: Fairly negative 2: Very negative 1: Unsure 0 Dairy Business Dairy Sector

14 Actors Challenges in West Java Challenges Farm Input Suppliers Quality, availability, and price Limited land for forage Farmers Farmers regeneration, farmers capabilities, cattle ownership, milk quality, milk quantity and productivity. Land and cow ownership scale. The size of cow/cattle house is small and located next to farmer s house. Dairy farming is mostly not inherited to or followed by the farmers second generation. Cooperatives Technical skills (milk quality and milk supply) Managerial skills (human resources development and organizational management). Price fluctuation Milk Processors Price and fluctuating supply from cooperatives Lack of infrastructure (SMEs MPI) Retailers Price, and logistics (cold chain system). The competition is still dominated by large companies,

15 Milk Price (Rp/L) Cooperatives Price Level Lowest Average Highest KPGS Cikajang MPI Farmers MPI KPBS Pangalengan Farmers MCP Farmers non-mcp MPI Kunak KPS Bogor MPI non-kunak Farmers Kunak Farmers non-kunak KUD Giri Tani MPI Farmers KPS Canjur Utara MPI Farmers

16 Actors Value Chain Priorities and Recommended actions Recommended actions Farm Input Suppliers Availability of forages through procurement of land for forages. Subsidy for raw material for feed. Farmers Dairy farming should be interesting, especially for young generation. Procurement of land for forages. Capacity building of farmers to increase their skill in dairy farming. Increasing dairy cattle population Improving local breed (genetic). Cooperatives Increasing managerial skills. Modern and lean organization. Milk Processors Investment in equipment (pasteurizer, freezer) as the pasteurization is still manual (boiled). Creating Standard Operational Procedure (SOP) in production unit. Retailers Direct selling using online trade. Developing product diversification. Educating consumers and farmers through advertising. Government Government policies should be synergized with the relevant stakeholders. Creating a government policy to increase drinking milk awareness.

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18 IndoDairy Project Bogor Agricultural University (IPB) Thank you

19 Standard requirement of fresh milk