Dairy duty: Indonesia presses businesses to fund a million cows

Nevin Al Sukari - Sana'a - KUNINGAN (Indonesia), Sept 9 — The once-empty barns of the Laras Ati milk cooperative are now filled with more than 200 pregnant Holstein-Friesian cows from Australia, part of Indonesia’s ambitious plan to boost milk production.

The programme — central to President Prabowo Subianto’s flagship pledge to provide free meals to 83 million children and expectant mothers — calls for importing one million dairy cows over five years at a cost of nearly US$3 billion, lifting the national herd more than four-fold from 220,000 currently.

With limited fiscal space, Jakarta is pressing private companies to fund the imports — an unorthodox approach that has raised concerns among businesses in Southeast Asia’s largest economy, according to participants and documents seen by Reuters.

Progress has been slow since the launch in December, with just 11,375 dairy cows imported by end-July, all from Australia, against a target of 200,000 for the year, government data shows. Experts say the lag has cast doubt over the expanded rollout of the free meals plan.

Indonesia, the world’s fourth most populous country, still relies heavily on imported milk powder from Australia, New Zealand and the US. The government hopes to reduce this dependency by bringing in live cattle to boost local output.

Deputy Minister of Agriculture Sudaryono said in June: “It’s not the government that will allocate funds to import live cattle. There is a significant demand for meat and milk, so we are opening the opportunity for many investors.”

Pressure to participate

Last November, shortly after Prabowo took office, the agriculture ministry sent a communique to more than 200 private businesses asking them to commit voluntarily to importing cattle — 20 cows a year from 2025 through 2029 — to support the free meals programme.

Industry sources said many companies felt compelled to participate for fear of repercussions, such as delays in securing import licences for their core businesses. Documents reviewed by Reuters showed at least one company’s import licence request was only approved after it raised its cattle commitment to 20.

As of May, 196 businesses had pledged to bring in cows, ministry data showed, though most had no prior experience with live cattle.

Dairy neophytes

At the Laras Ati co-op in West Java, chairman Arip Setiadi said investors and cooperatives were told by the agriculture ministry in March to collaborate to expand the dairy herd.

Of the cows there, 160 were bought by members of the Indonesian Association of Animal Protein Entrepreneurs (APPHI), with no cattle experience, and handed to the co-op to manage. Another 160 were sent to a co-op in East Java.

APPHI head Achmad Fachmi said businesses must follow government policy, adding that by supporting the programme they hoped to benefit from smoother licensing processes for their main operations.

Each cow costs around 45 million rupiah (US$2,800), covering purchase and six months of care. Under the scheme, investors and cooperatives share revenues, with returns expected in about three-and-a-half years.

Still, experts remain sceptical.

“As an exporter we have responsibilities with animal welfare. The infrastructure there doesn’t support all that,” said Adam Petty, founder of Dairy Livestock Exports, which ships thousands of animals annually to Indonesia.

Rochadi Tawaf, adviser to Indonesia’s Cattle and Buffalo Breeders Association, warned against relying on inexperienced firms. “If the programme is given to entrepreneurs with no track record of success in the dairy business, it won’t produce results,” he said. — Reuters