Minister of Cooperatives Budi Arie Setiadi has announced plans to coordinate with the Ministry of Trade to review import regulations for milk, following issues with domestic milk oversupply that have gone unabsorbed by processing factories. Speaking at a press conference in Jakarta on Monday, Budi Arie highlighted that approximately 80% of milk consumed in Indonesia is currently imported, primarily from New Zealand and Australia. These countries leverage free trade agreements with Indonesia that eliminate import duties, making their milk products at least 5% cheaper compared to global competitors. The situation is worsened as the dairy processing industry (IPS) prefers importing milk powder over fresh milk, which has led to significant losses for Indonesian dairy farmers, with fresh milk prices dropping to only IDR 7,000 per liter—below the ideal price of IDR 9,000 per liter.
Deputy Minister of Cooperatives Ferry Juliantono added that 70% of national milk production comes from dairy cooperatives but only meets 20% of the country's total milk demand. Government data shows that national milk consumption in 2023 reached 4.6 million tons, while domestic production managed to supply only 1 million tons, with the rest sourced through imports. Ferry stated that the government aims to gradually reduce the 80% import dependency by encouraging legally established milk processing industries within cooperatives. He also noted that the Ministry of Cooperatives will request the Ministry of Trade to reconsider the current 0% import duty on milk products, which is largely applied to imports from New Zealand and Australia. Recently, dairy farmers and milk collectors in Boyolali, Central Java, protested against processing factories' quota restrictions on milk absorption, with approximately 30,000 liters of milk per day remaining unabsorbed.
