Policy Review of Dairy Industry in Indonesia

Abstract

The Indonesian dairy industry is characterized by small farmers, having fewer than five dairy cows. In 2020, Indonesia still produced less than a third of the domestic demand for dairy products. Currently, the dependence on imported milk supply is still at the level of 77 percent in covering Indonesia's milk consumption needs. The Government of Indonesia (GoI) puts huge resources into the national dairy sector, aiming to increase domestic production. Similarly, the private sector is also playing a role in investment to develop infrastructure and build capacity to enhance growth in Indonesia's dairy sector. This report describes the main points of policy undertaken as a component of the AGB/2012/099 study: 'Improving the supply, competitiveness, and livelihoods of small-scale dairy production in Indonesia' (IndoDairy), commissioned by the Australian International Center for Agricultural Research (ACIAR). Specifically, this report discussed several regulations issued by the Government of Indonesia (GoI) related to (1) Dairy Inputs, (2) Price of Domestic and Imported Dairy Products, (3) Investments in the Domestic Industry, (4) Access to Credit, (5) Importation Regulation of Live Dairy Cattle, and (6) Importation of Dairy Products. By using SWOT analysis, the strengths, weaknesses, opportunities, and threats in each regulation are discussed particularly to support the development of sustainable, profitable, and smallholder-inclusive dairy supply chains. Many regulations have been established by the GoI related to the dairy industry. During pandemic Covid 19, additional regulations were also issued aiming to address the impact of the Covid-19 pandemic on the dairy industry. It is necessary to implement regulations that can encourage the increase in domestic fresh milk (SSDN) through coordination between ministries and agencies, both at the central and regional levels. This coordination is expected to create concrete steps so that small businesses in the national dairy sector can have better access to good quality dairy cow inputs and dairy cattle feed, green land, capital, as well as digital and traditional markets. The results of SWOT analysis give the best position for facing competition which is SO or strengths-opportunities strategies. dst ..