Improving milk supply, competitiveness and livelihoods in smallholder dairy chains in Indonesia
Demand for milk in Indonesia is rapidly growing, with an 5% increase each year. However, domestic production accounts for less than 20% of milk consumed in Indonesia and the sector faces a multitude of constraints to improve quantity and quality of milk produced locally.
A whole-of-chain approach is needed to improve capacity and performance in the Indonesian dairy sector, which includes dairy farmers, traders, village level dairy cooperatives (‘koperasi unit desa’ – KUDs), processors, retailers and consumers. Additionally, it is important to consider external factors affecting the dairy sector, (e.g. incentive schemes, programs, policies, global markets).
The Government of Indonesia (GoI) is investing substantial resources into the nation’s dairy sector, aiming to increase domestic production. The high priority the Indonesian government has placed on the dairy industry aligns closely with the research priorities of the Australian Centre for International Agricultural Research (ACIAR), including strengthening livestock management and marketing systems in Indonesia as well as improving smallholder access and competitiveness in rapidly transforming markets.
In June 2016, ACIAR and GoI approved the research project titled ‘AGB/2012/099: Improving milk supply, competitiveness and livelihoods in smallholder dairy chains in Indonesia’, also known as IndoDairy.
- Identify and recommend strategies and policies to support development of sustainable, profitable and smallholder-inclusive dairy supply chains in North Sumatra and West Java
- Identify barriers to adoption of profitable management practices and farm business models and develop strategies to inform development of extension programs in West Java and North Sumatra
- Develop, pilot and evaluate best-bet dissemination to improve adoption of innovative dairy management practices by smallholder farmers in West Java.
- Australasian Dairy Consultants / Subtropical Dairy
- The Indonesian Centre for Animal Research and Development (ICARD)
- The Indonesian Centre for Agricultural Socio-Economic Policy Studies (ICASEPS)
- Bogor Agricultural University (IPB)
The IndoDairy Smallholder Household Survey
During August and September 2017, a baseline household survey of 600 dairy farming households was conducted in West Java, Indonesia. This survey was called the IndoDairy Smallholder Household Survey (ISHS) and is the primary focus of Objective 2 of the IndoDairy project: ‘Identify barriers to adoption of profitable management practices and develop strategies to inform development of extension programs in West Java and North Sumatra’. More information about the ISHS
- Introduction to the “IndoDairy” Project & The IndoDairy Smallholder Household Survey (ENG / IND)
- IndoDairy Smallholder Household Survey Sampling Design and Survey Roll-out (ENG / IND)
Overview and comparisons by districts:
- Overview of Household and Farm Characteristics (ENG / IND)
- Overview of Individual Cow Characteristics and Farm Management Practices (ENG / IND)
- Dairy Farm Inputs (ENG / IND)
- Dairy Farm Labour (ENG / IND)
- Milk Productivity, Price and Quality (ENG / IND)
- Costs, Revenue and Profit (ENG / IND)
- Technology Adoption (ENG / IND)
- Farmers’ Attitudes, Perceptions of Change and Future Aspirations (ENG / IND)
- Gender Inclusiveness in Decision Making (ENG / IND)
- Gender Inclusiveness in Asset Ownership, Access to Credit and Group Membership (ENG / IND)
Comparison based on profitability:
- Introduction to Profitability Comparison (ENG / IND)
- Profitability Comparison - Household and Farm Characteristics (ENG / IND)
- Profitability Comparison - Individual Cow Characteristics and Farm Management Practices (ENG / IND)
- Profitability Comparison - Dairy Farm Inputs (ENG / IND)
- Profitability Comparison - Dairy Farm Labour (ENG / IND)
- Profitability Comparison - Milk Productivity, Quality and Price (ENG / IND)
- Profitability Comparison - Technology Adoption (ENG / IND)
- Profitability Comparison - Farmers’ Attitudes, Perceptions of Change and Future Aspirations (ENG / IND)
- Profitability Comparison - Gender Inclusiveness (ENG / IND)
Value chain analysis
The project examined dairy supply chains in West Java and North Sumatra, which included farmers, cooperatives, processors and retailers. Semi-structured interview were conducted to gather both qualitative and quantitative data. This information is being used both to assess issues and opportunities in the provinces.
A set of case studies outlining the success factors in developing existing partnerships between processors and smallholder dairy producers or cooperatives will also be conducted (e.g. for example Cimory in West Java).
Inclusive business models
Inclusive business principles in the agricultural sector provide smallholder farmers access to information, improved inputs and technology, land, better markets, and shortens the longer chains of intermediaries. Using these principles, the IndoDairy project evaluated a series of examples dairy chains in West Java and East Java.
This analysis identified successful relationships between these players, and the reasons for success and how these can be built upon. These key drivers are framing the analysis of key opportunities and barriers for expansion and scaling of the models.
Trialling ‘Whole-of-Chain’ approaches to improve milk quality
Using the findings from the value chain analysis and inclusive business principles, the IndoDairy project is piloting a ‘Whole-of-Chain’ approach to improve the milk supply from smallholder farmers in West Java.
With milk quality, in particular microbial contamination, being a significant issue facing the Indonesian dairy sector the project will focus on working with stakeholders throughout the chain to improve total plate counts (TPC).
The project team will first identify the critical control points along the chain where microbial levels increased most to identify the relative contributors to TPC. This will be followed by an incentive-based study, which will measure the change in farmer behaviour and TPC levels when individual farmers are paid on their milk’s quality.
The extension activities of the IndoDairy project aim to improve the adoption of innovative dairy management practices of smallholder farmers in West Java. These practices include areas of feeding management and nutrition, animal husbandry and reproduction, milk quality and business management. A number of methods, including development of resources, training workshops, farmer discussion groups and Focus Farms, were established to deliver extension across the topic areas in West Java.
A number of resources have been developed and made available to farmers and farm advisors to support field level activities and training. Valuable resources include the IndoDairy Farming Factsheets, posters and newsletters.
- Technical Training Factsheets “Essential Farming Facts” (ENG / IND)
- Poster: Milk Quality and Mastitis (ENG / IND)
- Poster: Feeding and Nutrition (ENG / IND)
- Poster: Calf Rearing and Animal Husbandry (ENG / IND)
- Poster: Farm Business and Recording (ENG / IND)
- Newsletter: October 2019 (ENG / IND)
- Newsletter: February 2020 (ENG /IND)
Discussion groups were established across the five regions involving a total of 186 farmers with 10 to 15 participating farmers in each group. This also included a women’s discussion group in Cijeruk, Bogor.
Each farmer group had a planning session to choose six technical topics of most interest to discuss during meetings over 12 months supported by the local village level researcher (facilitator) and extension staff. There was a final review session to evaluate and provide feedback for each of the groups.
Hear from some of the farmers participating in the discussion groups in a short video, titled “Voices from the Field”.
Focus Farms were piloted as an extension activity in West Java. A Focus Farm is an example of a real-life farmer who has specific goals and aspirations to improve the production and profitability of their farm. Over 12 months the Focus Farmer is supported by a group of advisors and farmers during regular meetings. The goals of the farmer are prioritised and activities are trialled or discussed throughout the meetings with the support of the facilitator.
Two focus farms were established in Cijeruk, Bogor. Find out more about Pak Ma’mur and Pak Yunus and their journeys.
Policy review and engagement
Reviewing policies and engagement with policy makers and industry stakeholders is important aspects of this project.
The policy review provides a better understanding of regulatory framework affecting dairy supply chains at different levels, the degree of competition in the dairy industry, contractual relationships between agents along the value chains and areas where inefficiencies occur. The improved understanding will contribute to more informed policies and programs that will better engage stakeholders.
The IndoDairy project is actively engaging with policy makers and industry to work towards a more effective and inclusive dairy sector in Indonesia. Multiple policy forums and roundtable discussions have been hosted by the project. Key stakeholders include representatives from the Coordinating Ministry for Economic Affairs, Ministry for Agriculture, Directorate General of Livestock and Animal Health Services, Ministry for Industry, Ministry for Cooperatives and Small to Medium Enterprises, Indonesian Dairy Farmers Association. Additionally, the project has engaged with industry forums, such as the Indo Livestock Expo to present the findings from the IndoDairy project.
Find out more about each event here:
Capacity Building is cross-cutting theme in the IndoDairy project. This includes development skills and capabilities of farmers, dairy cooperatives staff, researchers, students and policy makers. As part of the dairy extension activities, the IndoDairy project delivered an integrated training program to service providers and farm advisors in the technical areas relating to dairy managements.
- The recruitment of 5 Village Level Researchers (VLRs); recent graduates from Animal Science, Padjajaran University, Bandung
- 5 VLRs and 2 Researchers from IAARD agencies travelled to Australia
- Farmers trained in core technical disciplines of dairy farming (186 farmers across 5 cooperatives)
- CommCare training for key Institutions ICASEPS, ICARD and IPB, streamlining data collection methods.
- Ongoing training and mentoring of researchers in survey design and research methods
- Research papers and conference presentations, undergraduate and postgraduate students.