Indonesia Dairy Market Overview

Indonesia is emerging as an influential player in the Southeast Asian dairy market. This growth is supported by strategic government initiatives and international partnerships, helping maintain the industry's upward trajectory.

Dairy Cattle and Milk Production

The Indonesian dairy industry supports approximately 600,000 dairy cattle annually, resulting in a significant milk production volume of around 950 million liters per year. This production capacity caters to both domestic needs and export demands.

Milk Processing

Advancements in milk processing capabilities allow Indonesia to process about 700 million liters of milk annually, significantly impacting both local consumption and the international market.

Cheese, Milk Powder, and Whey Production

Cheese production in Indonesia, though still emerging, has reached approximately 5,000 metric tons annually, showing potential for future growth. Additionally, Indonesia produces about 20,000 metric tons of milk powder and 7,000 metric tons of whey per year, critical for domestic use and export potential.

Key Dairy Enterprises

• Indolakto
• Frisian Flag Indonesia
• Greenfields Indonesia
• Cimory

Leading Dairy Farms

• PT Ultra Jaya Milk Industry Tbk
• PT Greenfields Indonesia

Exports and Imports

Indonesia has seen a significant increase in dairy exports, nearly doubling with a 98% rise in recent years. Despite this, imports remain high, with approximately 3 billion liters of dairy products imported annually, mainly in the form of milk powder and various cheese varieties.

Significant Market Events

• Government Initiatives: Policies to support local farmers and improve production efficiency have provided a solid foundation for industry growth.
• International Partnerships: Collaborations with global dairy firms have facilitated technology transfer and improved production capacities.
• Investment Surge: There has been an increase in investments aimed at expanding processing facilities and modernizing dairy farms.
• Consumer Demand: Growing health-conscious consumer trends continue to drive industry expansion.
• Presidential Initiatives: Proposals to provide free meals to schoolchildren and pregnant women are expected to significantly boost dairy consumption and imports.
• International Collaboration: Efforts with countries like Nigeria aim to enhance dairy and livestock production capabilities.
• Protests: Farmers in regions like East and Central Java have protested against government milk procurement policies.
• Free Nutritious Meals Program: This initiative promotes the use of locally sourced milk, aiming to reduce import dependency.

Key Developments

The Indonesian dairy sector is set for sustained growth, fueled by substantial investments and government support. Efforts to enhance cooperation between the dairy industry and local farmers focus on improving production, quality, and sustainability. Challenges include achieving dairy self-sufficiency amid new import conditions. Additionally, Indonesia has embarked on a $28 billion program to combat malnutrition and plans to import 200,000 dairy cattle by 2025 to enhance milk production. Analysts anticipate volatility in palm oil prices due to supply constraints and external market issues, while British dairy opportunities in Asian and Middle Eastern markets are being explored.

• Additional notable developments include Indonesia's importation of dairy cattle to boost milk production, allegations against Fonterra related to palm kernel use connected to illegal deforestation, and strategic partnerships such as PT ABC Kogen Dairy's collaboration with Morinaga Milk Industry Co.
• Nestlé targets Indonesia with its Nescafé RTD cold coffee products following successful market launches.
• Greenpeace Aotearoa activists have disrupted the unloading of 30,000 tonnes of palm kernel from Indonesia.
• India's competitors, including Indonesia, face higher US tariffs.

Modified: 2025/04/08

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