Indonesia Dairy Market Analysis

Indonesia has emerged as an essential player in the Southeast Asian dairy market, with significant growth noted across various sectors, including production, processing, and exports. This growth is backed by strategic government initiatives and international partnerships aimed at sustaining the upward trajectory of the industry.

Dairy Cattle and Milk Production

The Indonesian dairy industry is bolstered by approximately 600,000 dairy cattle annually. This results in a substantial milk production volume of around 950 million liters per year, supplying both domestic needs and export demands.

Milk Processing

Indonesia's milk processing capabilities have seen improvements, with around 700 million liters of milk processed annually. This capability significantly impacts both domestic consumption and the international market.

Cheese Production

Though still developing, cheese production in Indonesia has reached approximately 5,000 metric tons annually, indicating growth potential in this segment.

Milk Powder and Whey Production

Indonesia's production of milk powder and whey is notable, with annual outputs of about 20,000 metric tons for milk powder and around 7,000 metric tons for whey. These products form a significant part of both domestic consumption and export potential.

Key Dairy Enterprises

• Indolakto
• Frisian Flag Indonesia
• Greenfields Indonesia
• Cimory

Leading Dairy Farms

• PT Ultra Jaya Milk Industry Tbk
• PT Ultrajaya Milk Industry and Trading Company Tbk
• PT Greenfields Indonesia

Exports and Imports of Dairy Products

Indonesia has seen a remarkable increase in dairy exports, which nearly doubled with a rise of 98% in recent years. Despite this growth, imports remain substantial at approximately 3 billion liters of dairy products per annum, primarily covering milk powder and diverse cheese varieties.

Significant Market Events

• Government Initiatives: Policies to support local farmers and improve production efficiency have been implemented, providing a strong foundation for industry growth.
• International Partnerships: Collaborations with global dairy firms have enabled technology transfer and improved production capabilities.
• Investment Surge: There has been a notable rise in investments aimed at expanding processing facilities and modernizing dairy farms, fostering further industry development.
• Consumer Demand: The rising trend in consumer demand, fueled by health consciousness and changing dietary habits, continues to propel industry expansion.
• Presidential Initiatives: President-elect Prabowo Subianto's proposal to provide free meals to over 80 million schoolchildren and pregnant women is projected to significantly increase dairy consumption and imports.
• International Collaboration: Collaborations with Kebbi State in Nigeria aim to enhance dairy and livestock production capabilities.
• Protests: Dairy farmers in East and Central Java have protested government milk procurement policies, seeking better terms for their produce.
• Free Nutritious Meals Program: This government program promotes the use of locally sourced milk to boost domestic dairy production and reduce reliance on imports.

Key Developments

The Indonesian dairy sector is poised for sustained growth, fueled by significant investments and governmental support. Efforts to strengthen cooperation between the dairy industry and local farmers are aimed at enhancing production, elevating quality, and ensuring sustainability. However, Indonesia's pursuit of dairy self-sufficiency poses challenges to a $1 billion trade due to the introduction of new import conditions. Meanwhile, Indonesia has launched a $28 billion nationwide program to combat malnutrition and stunting, and plans to import 200,000 dairy cattle by 2025 to enhance milk production.

Modified: 2025/01/21

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