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THE CATTLE INDUSTRY

Beef and buffalo

Winrock International Institute for Agricultural Development (1986) pointed out that with the exception of a few large government run and privately run cattle/buffalo farms, almost all of the draft and beef cattle are kept by smallholders. Their view was that in this situation animals are well integrated into the economic structure of the farm and village life. Although the Winrock report was produced over a decade ago, the beef industry is still mainly in the hands of smallholders. Most cattle are found in the provinces of Java, Madura, Bali and Lombok where the population density is high. The smallholders use few cash inputs in rearing the animals, and labour supplied usually by the farmer or some other family member is the major input. The labour requirements vary depending on how the cattle are managed. Many smallholders leave the cattle in pens and bring feed to them. This confinement management is referred to as “cut and carry”. As this name implies, grass is cut by the farmer or by labourers and carried to stalls or yards where the animal is held. Other smallholders tether their animals in grazing areas during the day and confine them at night. In still other cases, children or older people may herd the animals during the day. In some areas, cattle are permitted to run free in designated areas during the cropping season and are permitted to graze crop residues during the dry season. Since recycling of crop residues is an important function of cattle, keeping them tethered makes it easier for manure to be collected. Allowing the cattle free range requires close supervision to maintain the security of the animals.

Table 26 shows the number of beef cattle raising households while Table 27 shows the number of beef cattle from 1985 to 1997 in each of the provinces. The number of households remained almost unchanged for the country as a whole although there have been some fairly dramatic changes when the data for individual provinces are examined. For example, the government statistics showed Lampung and Bengkuku had no beef cattle raising households in 1963, but by 1993, Lampung had 125000 and Bengkuku had 13000. Similar changes occurred to the provinces in Sulawesi

The change in the numbers of beef cattle in Indonesia between 1985 and 1997, while large, was nothing like the magnitude of the changes in the poultry numbers. The government statistics indicate that cattle numbers increased from 9110000 to 12149000 or by about 33 per cent between 1985 and 1997. Lampung, Jambi, Irian Jaya and Kalimantan Timur had the largest relative increase in beef cattle numbers between 1985 and 1997. In each of these provinces, cattle numbers at least tripled. The highest beef cattle populations in 1997 were in Jawa Tengah (Central Java) and Jawa Timur (East Java). These were the provinces that had the highest numbers of cattle at the start of this decade as well (Figure 10).

The Indonesian government nominated seven provinces (Jawa Timur, Jawa Tengah, Yogyakarta, Lampung, Sumatera Selatan, Sumatera Barat and Nusa Tenggara Barat) for its cattle intensification program (INSAPP) in 1997-98. The objective of this program was to increase the beef cattle population by natural increase of 318340. Under the program, semen from pure breed bulls was to be distributed to farmers. The program was to be extended to other provinces in following years. At the time of writing, it was not clear whether the program was to be shelved.

Table 26. Number of beef cattle household 1963, 1973, 1983 and 1993

Provinces

1963

1973

1983(a)

1993(b)

DI Aceh

57921

70873

39366

75000

Sumatera Utara

39852

41414

37184

50000

Sumatera Barat

94700

99233

49918

63000

Riau

5304

5535

8173

24000

Jambi

8525

8843

13535

17000

Sumatera Selatan

53783

41364

40627

65000

Bengkuku

0

6299

4446

13000

Lampung

0

52614

50040

125000






DKI Jakarta

560

821

1302

0

Jawa Barat

59097

67321

57622

53000

Jawa Tengah

578127

563177

412957

473000

DI Yogyakarta

98813

120240

66843

95000

Jawa Timur

1311646

1301426

1078578

1180000






Bali

169486

189774

100227

127000

Nusa Tenggara Barat

66766

82024

79237

107000

Nusa Tenggara Timur

81676

66393

70649

79000

Timor-Timur

0

0

7159

20000






Kalimantan Barat

12020

18028

21840

38000

Kalimantan Tengah

3334

4314

3647

7000

Kalimantan Selatan

4509

8035

13237

26000

Kalimantan Timur

1716

1009

3133

12000






Sulawesi Utara

65101

61439

53298

57000

Sulawesi Tengah

0

42481

42640

44000

Sulawesi Selatan

46695

118921

179292

164000

Sulawesi Tenggara

0

2346

13735

32000






Maluku

0

6249

6827

16000

Irian Jaya

0

0

7159

20000






Indonesia

2759631

2980220

2458164

2976000

Notes: (a) beef cattle and dairy cattle; (b) preliminary figures

Source: Direktorat Jenderal Peternakan (1996), p. 50

Table 27. Beef cattle numbers by province, 1985 to 1997

Provinces

1985

1990

1991

1992

1993

1994

1995

1996

1997(a)

1997/ 1985

(000)

(000)

(000)

(000)

(000)

(000)

(000)

(000)

(000)

(%)

DI Aceh

384

392

398

515

531

558

599

635

703

5.79

1.83

Sumatera Utara

162

200

207

214

172

231

251

259

268

2.21

1.65

Sumatera Barat

333

369

376

384

392

390

411

414

418

3.44

1.26

Riau

49

99

106

109

110

115

121

129

139

1.14

2.84

Jambi

41

88

110

104

113

123

133

143

149

1.23

3.63

Sumatera Selatan

285

347

358

422

441

446

448

516

522

4.29

1.83

Bengkuku

73

92

93

95

96

94

93

94

94

0.77

1.29

Lampung

119

252

267

269

426

477

462

522

585

4.82

4.92













Jawa Barat

150

157

157

182

184

187

196

215

219

1.80

1.46

Jawa Tengah

1083

1162

1191

1184

1193

1249

1253

1260

1267

10.43

1.17

DI Yogyakarta

184

190

190

191

191

193

196

197

197

1.62

1.07

Jawa Timur

2791

3005

3062

3157

3163

3328

3302

3339

3383

27.84

1.21













Bali

424

456

436

472

484

500

514

528

544

4.47

1.28

Nusa Tenggara Barat

300

368

346

409

413

423

433

450

477

3.93

1.59

Nusa Tenggara Timur

585

659

676

749

767

786

785

717

717

5.90

1.23

Timor-Timur

50

68

77

85

93

122

124

137

151

1.24

3.02













Kalimantan Barat

87

108

117

132

142

148

150

154

169

1.39

1.94

Kalimantan Tengah

46

47

50

51

47

48

48

48

49

0.40

1.07

Kalimantan Selatan

75

120

130

129

134

148

159

167

170

1.40

2.27

Kalimantan Timur

20

56

71

67

74

76

81

83

88

0.72

4.40













Sulawesi Utara

209

246

253

260

264

265

272

283

285

2.35

1.36

Sulawesi Tengah

305

348

358

368

379

271

273

250

252

2.07

0.83

Sulawesi Selatan

1176

1218

1226

1236

643

785

806

828

841

6.92

0.72

Sulawesi Tenggara

106

244

285

290

233

249

265

277

285

2.35

2.69













Maluku

55

77

83

87

90

94

98

105

107

0.88

1.95

Irian Jaya

22

40

46

51

55

57

63

65

70

0.57

3.18













Indonesia

9111

10410

10667

11211

10929

11368

11534

11816

12149

100

1.33

Notes: (a) Preliminary figures

Source: Direktorat Jenderal Peternakan (1997), p89 for 1990 to 1997 data; Direktorat Jenderal Peternakan (1988), p3 for 1985 data.

Figure 10. Beef cattle numbers in 1990 and 1997 in each of Indonesia’s provinces

Despite an increase in cattle numbers of around 27%, Indonesia managed to increase production of beef by just under 50% between 1985 and 1995 (Table 28). The increase in cattle numbers came about through natural increase and also through imports of live cattle. Indonesia has been importing cattle from Australia since the 1970s. The breeds are primarily Bos indicus and Bos taurus. The purebred Bos indicus have been imported for mating. Specialised beef producers supplying the Jakarta market also use a Fresian breed called the “Grati”.

The data in Table 27 on cattle numbers and the data in Table 28 on production when considered together indicate an improvement in productivity between 1985 and 1995. This is shown by the percentage increase in production being greater than the percentage increase in numbers. However, examination of the data for each of the provinces shows the change in cattle numbers was not always related to the change in production. For example, cattle numbers in Kalimantan Timur in 1995 were over four times their 1985 level, but production was only 50% higher. On the other hand, cattle numbers in Jawa Barat increased by about 31% and production increased by over double this - by 64%. The situation in Jawa Tengah was similar. Cattle numbers increased by about 16% and production by 39%. These differences could be due to any of a number of factors, including agronomic characteristics of the regions, managerial ability of the farmer, the quality of the animals or differences in the cattle cycle between the regions.

Table 28. Beef meat production 1985 to 1994 by province

Provinces

1985

1990

1991

1992

1993

1994

1995

1996

1997

1997/ 1985

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(%)

DI Aceh

4.8

5.73

6.13

5.62

5.53

5.91

4.77

5.22

5.23

1.40

1.09

Sumatera Utara

3.73

3.37

3.48

4.57

4.37

6.19

7.58

9.60

9.93

2.67

2.66

Sumatera Barat

5.8

6.23

6.52

7.77

8.73

9.6

9.39

9.43

9.54

2.56

1.65

Riau

0.7

1.24

1.39

1.42

1.36

2.12

2.18

3.19

3.45

0.93

4.93

Jambi

0.63

1.52

1.76

1.68

2.19

2.26

2.26

2.35

2.44

0.66

3.87

Sumatera Selatan

6.1

7.69

8.19

8.03

11.45

10.78

10.61

11.35

11.87

3.19

1.95

Bengkuku

0.32

0.48

0.57

0.72

0.73

0.76

0.91

1.16

1.17

0.31

3.65

Lampung

2.42

4.22

4.22

5.39

3.86

3.71

3.95

4.36

4.93

1.32

2.04













DKI Jakarta

33.65

34.52

34.52

53.81

53.98

53.98

35.51

42.23

42.77

11.49

1.27

Jawa Barat

29.43

35.81

35.24

35.93

68.57

43.18

46.90

56.07

67.47

18.13

2.29

Jawa Tengah

26.06

28.44

29.06

30.66

33.74

40.94

36.17

39.75

43.69

11.74

1.68

DI Yogyakarta

4.02

4.45

4.4

4.85

5.27

5.33

5.13

4.61

4.64

1.25

1.15

Jawa Timur

66.97

71.28

78.94

81.46

85.27

94.91

89.42

95.61

102.02

27.41

1.52













Bali

12.75

11.54

10.15

10.31

10.19

7.5

6.93

6.84

6.84

1.84

0.54

Nusa Tenggara Barat

3.35

5.19

2.98

5.47

5.48

6.18

4.00

5.72

5.88

1.58

1.76

Nusa Tenggara Timur

1.43

4.47

1.74

3.11

3.54

4.06

4.69

4.43

4.19

1.13

2.93

Timor-Timur

0.49

0.71

0.8

0.81

0.91

0.73

0.92

1.02

1.12

0.30

2.28













Kalimantan Barat

2.18

2.94

2.94

3.95

4.92

2.78

3.17

3.13

3.27

0.88

1.50

Kalimantan Tengah

1.01

1.39

0.08

1.42

1.75

1.52

1.35

1.97

2.03

0.54

2.01

Kalimantan Selatan

2.27

3.42

3.42

3.05

3.38

3.29

3.46

4.06

3.48

0.93

1.53

Kalimantan Timur

4.4

5.02

4.86

5.17

5.67

6.38

6.60

6.76

6.88

1.85

1.56













Sulawesi Utara

1.65

1.36

1.36

4.37

5.55

5.36

5.39

5.42

5.53

1.49

3.35

Sulawesi Tengah

2.13

2.92

3.04

3.24

3.46

3.51

3.91

3.95

4.01

1.08

1.88

Sulawesi Selatan

8.51

9.87

9.91

10.36

10.37

9.73

9.99

10.25

10.52

2.83

1.24

Sulawesi Tenggara

1.06

2.64

3.47

1

3.17

3.17

3.31

3.96

4.11

1.10

3.87













Maluku

0.84

1.7

1.96

1.78

1.79

1.63

1.65

2.19

2.21

0.59

2.63

Irian Jaya

0.7

1.07

1.06

1.06

1.05

0.95

1.82

2.60

2.96

0.80

4.23













Indonesia

227.4

259.22

262.19

297.01

346.28

336.46

311.97

347.20

372.16

100.0

1.64

Notes: (a) Preliminary figures

Source: Direktorat Jenderal Peternakan (1997), p. 104 for 1994 to 1997 data Direktorat Jenderal Peternakan (1996), p. 92 for 1990 to 1993 data; Direktorat Jenderal Peternakan (1988), p. 32 for 1985 data.

Buffalo

Bovine meat also comes from the indigenous cattle and swamp buffalo. Both of these are small, slow growing animals (Winrock International Institute for Agricultural Development 1986). The age of first calving is late in comparison to temperate animals and calving intervals range from 18 to 24 months.

There are three major breeds of cattle used for draft/beef. These are Ongole, Bali and Madura. The less well know breed- the Aceh - is found in the Aceh province. Swamp buffalo are also used for draft power and beef in lowland areas and the Central Sumatra uplands. The breeds of cattle are shown in Table 29. These data are for 1984 since more up-to-date data were unavailable.

Table 29. Breeds of cattle in Indonesia, 1984

Breed

Number

Ongole

4400000

Bali

1000000

Madura

300000

Aceh, North Sumatra

400000

Grati

80000

Source: Winrock International Institute for Agricultural Development (1986).
The number of households with buffalo fell by over 50% between 1963 and 1993. The falls were not uniform across Indonesia. On Java island, the number of households with buffalo in each of the provinces fell by between 79% (Jawa Tengah and DI Yogyakarta) and 65% (Jawa Timur). Going against this trend, in some other provinces, the number of households with buffalo increased. For example, in Riau on Sumatra, the number of households with buffalo in 1993 was 44% higher than in 1963 while in each of the four provinces on Kalimantan the number of households with buffalo showed increases of between 97% and 660%. For most of the households with buffalo, the main use of the buffalo would be as a draft animal. Table 30 shows how the number of households with buffalo changed between 1963 and 1993.

Table 30. Number of households with buffalo 1963, 1973, 1983 and 1993

Province

1963

1973

1983

1993(a)

DI Aceh

55942

67755

45474

37000

Sumatera Utara

32756

43348

31606

37000

Sumatera Barat

31717

48848

23666

28000

Riau

5563

6369

7051

8000

Jambi

10260

13191

11741

12000

Sumatera Selatan

39477

15351

10474

10000

Bengkuku

0

11633

5879

7000

Lampung

0

12526

8385

13000






DKI Jakarta

3170

2330

410

0

Jawa Barat

274613

248572

122991

92000

Jawa Tengah

253904

173812

99353

54000

DI Yogyakarta

14604

10854

5191

3000

Jawa Timur

112391

79721

52838

39000






Bali

4484

5276

1979

2000

Nusa Tenggara Barat

40301

43478

39073

38000

Nusa Tenggara Timur

42139

39810

27534

26000

Timor-Timur

0

0

6134

10000






Kalimantan Barat

362

164

238

1000

Kalimantan Tengah

507

340

502

1000

Kalimantan Selatan

1298

2015

2546

4000

Kalimantan Timur

526

4330

1195

4000






Sulawesi Utara

3863

360

199

0

Sulawesi Tengah

0

2909

2294

2000

Sulawesi Selatan

94978

113880

84311

57000

Sulawesi Tenggara

0

2922

1919

1000






Maluku

0

600

834

3000

Irian Jaya

0

0

113

0






Indonesia

1022855

950394

593930

489000

Notes: (a) preliminary figures

Source: Direktorat Jenderal Peternakan (1996), p. 52

Table 31. Buffalo population 1985 to 1997 by province

Provinces

1985

1990

1991

1992

1993

1994

1995

1996

1997(a)

1997/ 1985

(000)

(000)

(000)

(000)

(000)

(000)

(000)

(000)

(000)

(%)

DI Aceh

434

362

367

383

393

409

421

430

454

14.01

1.05

Sumatera Utara

180

207

212

223

229

237

248

256

265

8.19

1.47

Sumatera Barat

167

194

201

206

209

196

205

216

228

7.03

1.36

Riau

37

40

42

42

43

44

45

50

55

1.71

1.49

Jambi

49

65

69

71

74

77

81

86

87

2.69

1.77

Sumatera Selatan

122

134

138

137

140

136

128

150

152

4.68

1.24

Bengkuku

79

94

95

96

97

91

86

87

88

2.72

1.11

Lampung

38

33

34

35

44

45

48

51

54

1.65

1.41













DKI Jakarta

2

1

1

1

1

1

1

0

1

0.02

0.25

Jawa Barat

470

501

506

525

529

522

501

491

487

15.04

1.04

Jawa Tengah

325

287

282

278

265

265

256

244

232

7.16

0.71

DI Yogyakarta

14

15

14

11

11

10

10

9

9

0.28

0.64

Jawa Timur

221

184

177

171

166

158

156

160

168

5.20

0.76













Bali

8

10

11

10

11

11

11

11

11

0.35

1.43

Nusa Tenggara Barat

221

227

234

212

215

214

214

220

227

7.01

1.03

Nusa Tenggara Timur

174

175

176

184

182

165

191

165

167

5.16

0.96

Timor-Timur

35

45

48

50

53

70

65

69

74

2.28

2.11













Kalimantan Barat

2

6

7

6

6

6

7

7

8

0.25

4.01

Kalimantan Tengah

8

9

9

9

9

9

9

12

12

0.38

1.54

Kalimantan Selatan

48

48

49

49

47

47

47

48

49

1.50

1.02

Kalimantan Timur

15

18

24

21

21

22

23

23

24

0.74

1.60













Sulawesi Utara

3

5

5

5

5

1

0

0

0

0.01

0.06

Sulawesi Tengah

32

38

38

40

42

14

14

10

10

0.30

0.31

Sulawesi Selatan

529

530

535

540

231

321

336

341

342

10.57

0.65

Sulawesi Tenggara

13

15

16

14

12

12

12

11

11

0.34

0.85













Maluku

20

21

21

21

21

21

22

22

23

0.71

1.15

Irian Jaya

0

1

1

1

1

1

1

1

1

0.03

nc













Indonesia

3245

3335

3311

3342

3057

3104

3136

3171

3238

100.00

1.00

Notes: (a) Preliminary figures

Source: Direktorat Jenderal Peternakan (1997), p. 91 for 1995 to 1997 data; Direktorat Jenderal Peternakan (1996), p. 80 for 1990 to 1994 data; Direktorat Jenderal Peternakan (1988), p. 3 for 1985 data.

Table 32. Buffalo meat production 1985 to1994 by province

Province

1985

1990

1991

1992

1993

1994

1995

1996

1997(a)

1997/ 1985

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(kt)

(%)

DI Aceh

1.48

2.25

2.83

2.89

2.82

1.81

3.10

2.89

3.17

6.14

2.14

Sumatera Utara

4.18

4.68

4.66

6.11

6.12

6.73

8.21

9.13

9.44

18.30

2.26

Sumatera Barat

3.36

2.74

2.78

3.25

4.01

3.62

3.85

3.85

4.24

8.22

1.26

Riau

1.92

1.87

1.92

0.82

2.23

2.11

2.13

2.29

2.42

4.69

1.26

Jambi

1.18

1.24

1.25

1.52

1.67

1.56

1.79

1.73

1.81

3.50

1.53

Sumatera Selatan

1.86

1.95

2.08

2.17

2.42

2.31

2.17

2.14

2.20

4.26

1.18

Bengkuku

1.08

0.61

0.63

1.24

1.26

1.14

1.73

1.01

1.02

1.97

0.94

Lampung

0.86

0.47

0.47

0.41

0.4

0.39

0.40

0.24

0.25

0.49

0.29













DKI Jakarta

4.36

3.16

3.16

3.63

4.54

4.54

1.17

1.57

1.60

3.10

0.37

Jawa Barat

13.24

11.05

13.43

9.22

12

9.66

8.37

8.66

9.24

17.91

0.70

Jawa Tengah

6.72

5.58

6.27

4.92

5.08

5.18

4.93

4.93

4.70

9.11

0.70

DI Yogyakarta

0.13

0.07

0.05

0.06

0.05

0.06

0.05

0.05

0.05

0.09

0.35

Jawa Timur

0.67

0.56

0.55

0.32

0.27

0.4

0.33

0.33

0.21

0.41

0.32













Bali

0.02

0.01

0.02

0.01

0.01

0.02

0.01

0.01

0.01

0.01

0.30

Nusa Tenggara Barat

1.42

0.85

0.4

1.03

1.03

1.56

1.16

1.54

1.83

3.55

1.29

Nusa Tenggara Timur

0.31

0.19

0.11

0.11

0.17

0.17

0.17

0.23

0.23

0.44

0.74

Timor-Timur

0.24

0.32

0.33

0.35

0.38

0.33

0.36

0.36

0.36

0.70

1.51













Kalimantan Tengah

0.01

0.04

0.06

0.03

0.05

0.05

0.06

0.07

0.05

0.10

5.30

Kalimantan Selatan

0.5

0.57

0.57

0.57

0.47

0.37

0.53

0.55

0.66

1.28

1.32

Kalimantan Timur

0.5

0.5

0.23

0.35

0.13

0.27

0.29

0.41

0.71

1.37

1.41













Sulawesi Tengah

0.01

0

0.1

0.1

0.1

0.26

0.02

0.02

0.02

0.04

2.30

Sulawesi Selatan

4.4

5.46

5.58

5.75

5.79

5.44

6.48

6.48

7.07

13.71

1.61

Sulawesi Tenggara

0.14

0.11

0.14

0.18

0.16

0.2

0.16

0.16

0.17

0.32

1.18













Maluku

0.01

0

0

0.05

0.02

0.01

0.02

0.02

0.03

0.06

2.90













Indonesia

48.6

44.29

47.53

45

51.23

48.2

47.50

48.66

51.59

100.0

1.06

Notes: (a) Preliminary figures

Source: Direktorat Jenderal Peternakan (1997), p. 105 for 1995 to 1997 data; Direktorat Jenderal Peternakan (1996), p. 93 for 1990 to 1994 data; Direktorat Jenderal Peternakan (1988), p. 32 for 1985 data

The dairy industry

The dairy industry began in Indonesia in the nineteenth century at the instigation of the Dutch authorities. The industry, which was concentrated on Java, catered mainly for the Dutch expatriates who lived in Indonesia. After the Dutch were forced out of Indonesia in 1945, Indonesian farmers took over the industry. For the Indonesians, the main reason for keeping dairy cattle was the production of manure. Gradually this purpose changed to produce milk (INI ANSREDEF 1995).

Dairy cooperatives have been an important part of the industry since the industry is based upon smallholders organized into cooperatives. The first cooperative was established in Pengalengan, near Bandung in West Java in 1948. Later, cooperatives were established in Pujon (near Malang in East Java), in Pasuran (Grati in East Java), and in Boyali and Ungaran in Central Java. During the 1960s, many cooperatives went bankrupt, so that by 1978, only two cooperatives had managed to survive. These were Pengalengan[7] and SAE in Pujon (INI ANSREDEF 1995). The third Five Year Development Plan (1979 to 1983) was a key period for the industry. A dairy cooperative organization - known as BKKSI (the Indonesian Dairy Cooperative Board) was established in July 1978. This body lasted only one year, being replaced by the GKSI (Union of Dairy Cooperatives of Indonesia, or Gabungan Koperasi Susu Indonesia). This is a secondary cooperative, whose membership is made up of the Chairman of the primary (or farmer level) cooperatives (GKSI 1996). GKSI still plays an important part in the industry since it is involved in the setting of the mixing ratio, a policy measure that will be discussed later in this report.

Table 33 shows the distribution of dairy households by province. It is obvious that Java is where the industry is concentrated. In 1993 about 96% of the households with dairy cattle were on Java while 3.3% were on Sumatera. In 1991, the government began allocating imported dairy cattle to provinces with small numbers of milking cows in an effort to diversify the industry away from its Java base. The program seems to have had little success because the milk processing industry is so well established in Java (PT Corinthian Infopharma Corpora 1995).

Table 33. Number of dairy cattle household 1963, 1973, 1983 and 1993(a)

Provinces

1963

1973

1983

1993(b)

DI Aceh

1399

151

0

0

Sumatera Utara

4039

932

6600

1000

Sumatera Barat

2099

588

476

0

Riau

145

17

0

0

Jambi

650

56

0

0

Sumatera Selatan

3435

230

0

0

Bengkuku

0

97

541

0

Lampung

0

308

0

0






DKI Jakarta

1390

1530

458

0

Jawa Barat

5684

2893

11534

26000

Jawa Tengah

16716

12294

21894

31000

DI Yogyakarta

1905

846

1436

1000

Jawa Timur

12391

10519

25748

39000






Bali

583

131

335

0

Nusa Tenggara Barat

383

208

0

0

Nusa Tenggara Timur

3628

80

0

0






Kalimantan Barat

672

82

327

0

Kalimantan Selatan

327

0

0

0






Sulawesi Utara

623

171

0

0

Sulawesi Selatan

621

245

0

0






Irian Jaya

0

0

247

0






Indonesia

56600

31438

64663

98000

Notes: Notes: (a) Provinces that did not have dairy cattle in any of the years are excluded from the table (b) Preliminary figures

Source: Direktorat Jenderal Peternakan (1996), p. 51.

The dairy industry development was most rapid in Repeleta III. The government noticed the widening gap between consumption and production during the 1970s when local production met only about 5% of sales. The government also saw the industry as a potential source of income to many poor rural communities and so it set developmental and production targets subsidised with government funding. It is apparent from Table 34 that almost all of the expansion in dairy cattle numbers between 1985 and 1997 occurred on Java. Dairy cattle numbers more than doubled in Jawa Barat (West Java) and in Jawa Tengah (Central Java).

Table 34. Dairy cattle population 1985 to1995, by province(a)

Province

1985

1990

1991

1992

1993

1994

1995

1996

1997(b)

1997/ 1985

(no.)

(no.)

(no.)

(no.)

(no.)

(no.)

(no.)

(no.)

(no.)

(%)

DI Aceh

0

0

0

354

46

46

151

153

181

0.05

nc

Sumatera Utara

6368

7233

7428

7625

7833

7920

7935

8362

8811

2.49

1.38

Sumatera Barat

1968

2314

2393

2331

1821

992

997

934

944

0.27

0.48

Jambi

18

32

32

32

0

40

23

23

23

0.01

1.28

Sumatera Selatan

50

159

173

182

166

154

145

145

174

0.05

3.48

Bengkuku

149

104

119

125

131

52

54

0

0

0.00

0.00

Lampung

75

146

150

160

34

69

58

39

40

0.01

0.53













DKI Jakarta

5156

5811

5881

5537

5342

4796

4653

4312

4300

1.22

0.83

Jawa Barat

49666

104580

107087

108218

113803

114681

118753

119744

121262

34.33

2.44

Jawa Tengah

41251

75279

78844

81647

90993

94457

97035

97520

98007

27.75

2.38

DI Yogyakarta

3470

3761

2876

2924

2924

2766

2791

2744

2900

0.82

0.84

Jawa Timur

66278

93769

100524

102235

105657

107216

108299

113554

116064

32.86

1.75













Bali

131

119

90

87

89

86

75

78

78

0.02

0.60

Timor-Timur

0

0

34

41

0

38

40

42

44

0.01

nc











0.00

nc

Kalimantan Barat

785

152

157

179

188

198

51

54

70

0.02

0.09

Kalimantan Tengah

24

0

2

0

3

0

3

3

3

0.00

0.13

Kalimantan Selatan

0

55

84

74

69

82

92

98

103

0.03

nc

Kalimantan Timur

35

139

139

110

126

69

74

74

76

0.02

2.17













Sulawesi Utara

0

116

138

126

126

60

21

21

24

0.01

nc

Sulawesi Selatan

0

0

0

78

0

78

30

32

32

0.01

nc













Maluku

24

0

0

8

12

12

0

0

0

0.00

0.00

Irian Jaya

121

109

139

153

157

92

54

57

63

0.02

0.52













Indonesia

175638

293878

306290

312226

329520

334021

341334

347989

353199

100.0

2.01

Notes: (a) Provinces that did not have dairy cattle in any of the years are excluded from the table (b) Preliminary figures

Source: Direktorat Jenderal Peternakan (1997), p. 90 for 1995 to 1997 data; Direktorat Jenderal Peternakan (1996), p. 79 for 1990 to 1994; Direktorat Jenderal Peternakan (1988), p. 3 for 1985.

Table 35 contains information on milk production. This more than doubled between 1985 and 1995 from 191100 t. to 432940 t. Almost all of Indonesia’s milk is produced on Java, with Jawa Barat (West Java) showing a four fold increase between 1985 and 1995 to 223300 t.

Table 35. Fresh milk production 1985 to 1997 by province(a)

Province

1985

1990

1991

1992

1993

1994

1995

1996

1997(b)

1997/ 1985

(Kt)

(Kt)

(Kt)

(Kt)

(Kt)

(Kt)

(Kt)

(Kt)

(Kt)

(%)

DI Aceh

0.00

0.00

0.00

0.42

0.05

0.05

0.15

0.18

0.18

0.04

nc

Sumatera Utara

6.40

8.51

8.74

8.97

9.21

4.60

5.34

5.86

6.18

1.38

0.22

Sumatera Barat

2.00

2.72

2.81

2.74

2.14

1.00

1.01

0.94

0.95

0.21

0.11

Riau

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

nc

Jambi

0.00

0.04

0.04

0.04

0.00

0.01

0.00

0.01

0.01

0.00

nc

Sumatera Selatan

0.00

0.19

0.20

0.21

0.20

0.13

0.13

0.12

0.12

0.03

nc

Bengkuku

0.10

0.12

0.14

0.15

0.15

0.06

0.05

0.00

0.00

0.00

0.00

Lampung

0.00

0.17

0.18

0.19

0.04

0.02

0.02

0.02

0.02

0.00

nc













DKI Jakarta

5.40

6.83

6.92

6.51

6.28

7.70

6.25

5.87

5.87

1.31

0.24

Jawa Barat

55.50

122.99

125.93

127.26

133.83

215.64

223.30

225.17

226.55

50.74

0.91

Jawa Tengah

43.30

88.53

92.72

96.02

107.01

64.01

63.68

65.13

66.62

14.92

0.34

DI Yogyakarta

3.50

4.42

3.38

3.44

3.44

3.59

3.43

3.39

3.58

0.80

0.23

Jawa Timur

74.70

110.27

118.22

120.23

124.25

129.54

129.63

134.04

135.92

30.44

0.41













Bali

0.10

0.14

0.11

0.10

0.10

0.12

0.11

0.09

0.09

0.02

0.21

Timor-Timur

0.00

0.00

0.05

0.05

0.00

0.05

0.04

0.04

0.04

0.01

nc













Kalimantan Barat

0.80

0.18

0.18

0.21

0.22

0.02

0.06

0.06

0.08

0.02

0.02

Kalimantan Selatan

0.00

0.06

0.10

0.09

0.08

0.08

0.12

0.09

0.09

0.02

nc

Kalimantan Timur

0.00

0.16

0.16

0.13

0.15

0.07

0.08

0.09

0.09

0.02

nc













Sulawesi Utara

0.00

0.14

0.16

0.15

0.15

0.04

0.01

0.01

0.01

0.00

nc

Sulawesi Selatan

0.00

0.00

0.00

0.09

0.00

0.00

0.04

0.05

0.06

0.01

nc













Irian Jaya

0.10

0.13

0.16

0.17

0.18

0.00

0.00

0.00

0.00

0.00

0.00













Indonesia

191.9

345.60

360.20

367.18

387.52

426.73

433.44

441.16

446.48

100.0

0.52

Notes: Notes: (a) Provinces that did produce milk in any of the years are excluded from the table (b) Preliminary figures

Source: Direktorat Jenderal Peternakan (1997), p. 119 for 1995 to 1997 data; Direktorat Jenderal Peternakan (1996), p. 106 for 1990 to 1994 data; Direktorat Jenderal Peternakan (1988), p. 40 for 1985 data.

Dairy farms in Indonesia are small - on average they have between three and four dairy cattle per farm. According to industry sources, in 1994, there were only a dozen or so farms with over 100 milking cows, and only about 330 with between 10 and 100 cows. There are a number of reasons for the small size of dairy farms. First, land transfer laws and the cooperative structure make consolidation of small tracts of land into larger holdings very difficult. Second, the agricultural credit schemes that have been used in the industry are generally intended to assist smallholders to purchase a very small number of cattle. They are not designed to help larger farmers. Third, small farmers have limited resources and are basically subsistence farmers. Fourth, government policy has been geared towards the development of cash crops and before that food self-sufficiency. Dairy cattle were seen as only a supplementary source of income. Finally, few small farmers would consume the milk produced on the farm themselves. They would be more likely to use it to feed calves.

Production per cow is not high, averaging about 1100 l. per year. Riethmuller and Smith (1995) found from a survey of Javanese farmers that some cows produce as little as 500 l. to 600 l per year. Farmers feed their cattle little concentrate and the grasses that are fed are sometimes of low nutritional content. The milk is often of poor quality with a high bacterial content. Mastitis is frequently a problem because of poor milking practices. Farmers deliver milk to collection points located perhaps 1 km from the farm. The volume of the milk is measured; its specific gravity is tested to check it hasn’t been watered down; and the employee of the cooperative collecting the milk carries out a taste test. The price that each farmer receives is the average for the cooperative, providing farmers with little or no incentive to improve milk quality. Prices between cooperatives can vary, depending on the quality of the milk the cooperative delivers to the processing plant.

One of the initial functions of the GKSI was to arrange imports of dairy cattle.[8] Between 1979 and 1983, just over 52000 dairy cattle were imported from Australia and New Zealand. By 1993, about 85000 dairy cattle had been imported. These cattle were distributed to farmer members of the primary multi- enterprise village cooperatives and KUD. The KUD or Koperasi Peternak Serap are village based dairy cooperatives that collect milk and the sell it to the processors. Most of the imported cattle were assigned to eight provinces.[9] Besides importing cattle, the GKSI established four milk treatment plants and two feed mills.

Part of the rationale for the dairy industry is that it provides an opportunity for small farmers, many of whom do not own land, to accumulate assets. Doran et al. (1979) argue that such an approach is an accessible and reliable vehicle for such farmers to accumulate wealth. However, the ability of smallholders to raise cattle will be greatly influenced by the availability of labour, particularly family labour. As the opportunity cost of this family labour increases, the economic profit of cattle may decline or disappear. The increased availability of schooling reduces the amount of child labour. Adult labour may not be substitutable for child labour since in some parts of Indonesia, Kristanto (1982) points out that tending animals is considered to be an inferior occupation for adult males.[10] This places an upper limit on the number of cattle that can be raised. A related problem with the use of children is that the extension programs are directed mainly at males. Hence children may not be able to recognize disease or other production related problems.

As is also the case with beef cattle and buffalo, it is common practice for dairy cattle to be tethered by the side of roads. In such cases, feed is cut and carried to them. Alternately, they may be herded to “waste” areas where they graze on crop residues. As mentioned already, feed supplements are rarely given in sufficient quantity in the view of Kristanto (1982) and Smith and Riethmuller (1995). During the nonproductive period, Kristanto (1982) believes it does not pay the farmer to give the animal supplementary feed. His view is that any increase in value may not offset the time the farmer has to allocate to gathering additional feed for the animal.

The dairy cattle population is made up almost exclusively of pure bred Fresian Holsteins. This dates back to the pre-independence days. Considering the large body size (over 500 kg) and the breed’s intolerance of heat and humidity, the dominance of Fresian Holsteins may be a source of inefficiency for the industry. On the positive side, a beef fattening industry has developed among small holders using the Fresian Holstein bull calves produced from dairy cows. These cattle have shown a hardiness and rapid rate of growth under typical small holder confinement feeding systems. They produce a lean carcass and high yield that Javanese butchers are said to prefer. Other breeds such as Red Danish, Illawara Shorthorn and Australian Fresian Sahiwal have also been imported at different times, but apparently with limited success (INI ANSREDEF 1995).

The Indonesian government has been running an artificial insemination (AI) program based mainly upon Fresian Holstein bulls. Semen is produced for the Director General of Livestock Services, or for the KUD to which the farmer belongs. In the past a large quantity of Fresian Holstein semen was imported from Australia, New Zealand, Japan and the USA. The Indonesian government, with technical assistance from the government of New Zealand, has established two bull studs: at Lembang in Central Java and at Singosari in East Java. Lembang has the semen from the Fresian Holstein bulls while Singosari has the semen from Bali, Ongole and Brahman cattle. Besides the use of AI, the government has continued to import cattle (mentioned earlier) and to assist the industry through credit programs and through improving management. Information on the attributes of the bull providing semen is not available. This means it is impossible for farmers to improve specific attributes of their cattle through AI.

The small dairy herd in Java leaves little room for selection on the female side. All heifers must be kept as replacements. Winrock International Institute for Agricultural Development (1986) reported that no studies of replacement rates had been done at the time of their report. Culling is done for loss of fertility or mastitis rather than loss of production. There is no systematic herd recording scheme in place.

Winrock International Institute for Agricultural Development reported that the genetic quality of the bulls used to produce the semen at Lembang is unknown and ten years later this still seemed to be the case. As the Winrock team noted, there would seem to be considerable potential to improve production on the male side. It is assumed by many in the industry that imported Fresian Holstein bulls will have a positive effect on the industry because they are coming from countries where milk yields are higher. This may not be the case given the heritability of milk production - 25%.

Calf management practices are similar to other countries. Calves are navel dipped with iodine at birth and given colostrum by suckling for several days. Milk feeding is generally for three months and averages two litres per day. Calves receive cut grass and a supplement of rice bran or concentrate. Bull calves are sold at birth or raised to weaning. Sometimes the dairy farmer will share fatten the calf through an arrangement with other farmers. This involves profit sharing and cost sharing.

The Busep or mixing ratios is a policy measure that is used in the industry to encourage the local industry.[11] Under this measure, domestic dairy processors are permitted to import material inputs (such as skimmed milk powder) only after they have absorbed all domestically produced milk. The ratio in the second half of 1997 was 1:1.7 (Table 36) which means that for every 1 l. of domestic production that is absorbed, processors are permitted to import 1.7 l. of milk (or milk equivalent). When first used in 1977, the ratio was 1:25, indicating that the local content was 4%. According to INI ANSREDEF (1995), Indonesia was planning to continue with the mixing arrangements in the short term, replacing it by a tariff in 2003 as part of Indonesia’s commitment to the WTO.[12] Only a limited number of firms (10 in 1995) are permitted to import milk but firms not permitted to import are permitted to buy BUSEP from firms that are allowed to import.[13] Information on the price at which BUSEP have been traded is not made public. Riethmuller and Smith (1994) and then Riethmuller et al. (1999) estimated the welfare losses from the policy to be of the order (at most) of A$25 million to $30 million per year. As a result of the IMF intervention in the economy, the BUSEP and other local content schemes were abolished on 1 February 1998.

Table 36. Mixing ratio figures 1982-1997

Year

Semester

Mixing ratio

Domestic milk

Imported

1982

1

1

8

1982

2

1

7

1983

1

1

6

1983

2

1

5

1984

1

1

3.5

1984

2

1

3.5

1985

1

1

2

1985

2

1

2

1986

1

1

3.5

1986

2

1

3.5

1987

1

1

2

1987

2

1

2

1988

1

1

1.7

1988

2

1

0.7

1989

1

1

0.7

1989

2

1

0.7

1990

1

1

0.53

1990

2

1

0.75

1991

1

1

1

1991

2

1

2

1992

1

1

2

1992

2

1

2

1993

1

1

1.25

1993

2

1

1.6

1994

1

1

1.6

1994

2


2

1995

1

1

2.125

1995

2

1

2.9

1996

1

1

2.4

1997

1

1

1.7

Notes: The ratio is decided every six months in the meeting of the Dairy Coordinating Team
Dairy consumption in Indonesia is not high compared with western countries. The most popular product is sweetened condensed milk. This is consumed dissolved in boiled water. Fresh milk is expensive and is only consumed by the wealthy or expatriates since refrigeration is not common in Indonesia. Powdered milk ids consumed mainly by children. Later in this paper information on elasticities will be presented and dairy products will be shown to be income elastic. This means that during the next few years when Indonesia’s economic growth is likely to be low, the demand for milk and dairy products is not likely to show much growth.

[7] Pengalengan is the largest dairy cooperative in Indonesia in terms of number of members. In 1996, there were about 12 000 member farmers.
[8] Imports took plpace before the GKSI was established. Hutabarat (1996) mentions that dairy cattle were imported in 1962 to meet milk demand for the Asian Games held that year in Jakarta. These were Holstein Fresian cattle imported from Denmark. Imports (also Holstein Fresians) in 1965 came from the Netherlands.
[9] The provinces were Jakarta, West Java, Yogyakarta, Central Java, East Java, North Sumatera, West Sumatera and Bengkulu.
[10] Kristanto (1982) makes this point in relation to Buginese and Makassar society.
[11] The Busep is actually a certificate and it was introduced under the Joint Decree of the three ministers in July 1982.
[12] It is difficult to obtain information on the future value of the mixing ratio. Some analysts indicated that its value would be 1:4.8 by 2000, while INI ANSREDEF (1995) wrote that the ration would not be “less than 1:1.6” (p. 21).
[13] The registered importers are PT Food Specialities Indonesia, PT Indomilk, PT Friesche Vlag Indonesia, PT Foremost Indonesia, PT Ultra Jaya, PT Dafa, PT sari Husada, PT Mirota, Pt Nutricia Indonesia and PT Sugizindo. PT Panca Niaga is the registered importer of fresh raw milk for the non milk processing industry.

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