The Ministry of Industry (Kemenperin) reports that Indonesia's milk processing production capacity has reached 4.64 million tons, supplying 20% of the country’s raw milk needs. According to Putu Juli Ardika, Director General of Agro Industry at Kemenperin, investments in the milk processing industry reached IDR 23.4 trillion by 2023, creating 37,000 jobs. "The sector is developing well, with 88 milk processing factories producing 4.64 million tons per year," Putu noted on Sunday (May 26, 2024). Liquid milk and cream constitute 49% of the production, followed by sweetened condensed milk at 17%, and powdered milk at 17.5%. Key export products include formula milk, baby food, ice cream, yogurt, powdered milk, sweetened condensed milk, and liquid milk and cream. The sector has significantly contributed to the national economy, with new investments from companies like PT Frisian Flag Indonesia, PT Nestle Indonesia, PT Kian Mulia, and planned investments from Qatar’s Baladna.
New investments in liquid milk production have increased the demand for fresh milk from domestic sources. Market trends are shifting towards liquid milk (UHT and pasteurized), with per capita consumption currently at 16.9 kg per year. However, only 20% of the required raw milk is supplied domestically due to a mere 1% growth in fresh milk production over the past six years. Challenges in domestic fresh milk production include a limited dairy cow population (around 592,000), low productivity (8-12 liters per cow per day), and high feed cost-to-milk production ratios (0.5-0.6). Limited land for barns and forage, small ownership of dairy cows by smallholder farmers (2-3 cows per farmer), high rearing costs, lack of understanding of Good Dairy Farming Practices (GDFP), and low interest among young people in dairy farming are additional hurdles. Government support is crucial for addressing these issues. Kemenperin has provided 84 cooling units to 68 dairy cooperatives in West Java, Central Java, and East Java. In 2021, a Milk Collection Point (MCP) was established in Pengalengan, West Java, and in 2022, 40 milk reception points (TPS) in East Java were digitized as part of the Industry 4.0 program to monitor milk quality in real-time. The ministry is also promoting partnerships between dairy cooperatives and smallholder farmers to address upstream challenges.
