A new A$3.7 million ACIAR-funded research project will create more profitable value chains for smallholder farmers in Indonesia’s growing dairy sector.
The 5-year initiative aims to increase farmer livelihoods by working with milk cooperatives to improve their engagement with the private sector and build more inclusive and sustainable value chains.
Led by Central Queensland University (CQU) in partnership with Indonesian research institutions, the ‘IndoDairy 2’ project builds off previous ACIAR-supported research that worked with dairy farmers, cooperatives and processors to increase milk quantity and quality.
While Indonesia’s dairy sector is steadily growing, the country can only meet 22% of its current domestic demand. With a rapidly growing middle-class, the demand for safe, nutritious, high-quality dairy products is expected to increase substantially.
Project leader from CQU, Dr David McGill, said the gap in supply is an opportunity for smallholder dairy farmers to increase household incomes, but interventions are needed.
‘Poor access to quality feed, lack of land for growing fodder, low cow and farm productivity, minimal supply chain cooling infrastructure and poor food safety practices are all barriers to unlocking economic potential for smallholder communities,’ said Dr McGill.
The Indonesian Government has committed to a national plan which outlines the importance of supporting smallholder dairy farming to address poverty, food security and malnutrition.
‘Milk cooperatives play a critical role as a nexus point between farm-level and value chain solutions within the system. Understanding the diversity and capacity of these cooperatives across the major dairy producing areas of Indonesia is essential to scale practice changes,’ said Dr McGill.
Dr McGill added that there had also been significant events and developments since the IndoDairy 1 project concluded in 2022, including structural changes to local agricultural extension and advisory systems, ongoing impacts of the COVID-19 pandemic, and foot-and-mouth and lumpy skin disease outbreaks.
The research team will assess how these changes have altered the local extension and advisory systems critical to engaging with farming communities.
Indonesian country coordinator for the project from Bogor Agricultural University (IPB), Dr Sahara, said the project team will capitalise on the established partnerships from IndoDairy 1 and engage with value chain actors to design appropriate interventions.
‘Understanding the motivations of different actors along the value chains is important for ensuring value chains are inclusive and sustainable,’ said Dr Sahara.
‘These insights can inform interventions to reduce transaction costs, improve coordination among actors along dairy value chain, reduce room for opportunistic behaviour and enable smallholder farmers to engage in profitable markets through cooperatives. In Indonesia, cooperatives have important roles in linking smallholder dairy farmers to markets/processors as well as input markets.’
The project team aims to evaluate technical interventions through 10 case studies across Central Java and West Java, with up to 5,000 dairy producers participating. The studies will host annual focus group discussions and share lessons with wider provincial cooperatives and extension and advisory groups.
Dr Sahara, who is also a John Allwright Fellow and ACIAR Alumni, said the project will work with our other in-country partners, including, Diponegoro University (UNDIP) and the Indonesian Center for Agriculture Socio Economic and Policy Studies (ICASEPS)-Ministry of Agriculture to establish a ‘Dairy Industry Advisory Committee’ to foster greater collaboration throughout the dairy value chain and expedite change.
‘The committee will include government ministries and agencies from the project’s inception to enable discussion on what recommendations and strategies could be made to enable cooperatives to support their smallholder dairy farmer members better,’ said Dr Sahara.
‘The committee will be critical in empowering cooperatives to be agents of change and drive market performance.’
ACIAR Chief Executive Officer, Professor Wendy Umberger, said Australian knowledge and dairy expertise will continue to be crucial in supporting Indonesia increase its dairy production.
‘ACIAR has been supporting Australian and Indonesian collaboration in this space since 2012. The Australian Dairy Industry was hugely supportive of helping build the scientific capacity of Indonesia researchers in the initial IndoDairy project,’ said Prof Umberger.
‘There is a significant opportunity in IndoDairy 2 for further knowledge exchanges between Australia and Indonesia and opportunities to collaborate in areas like animal health, biosecurity, tropical feed enhancements, genetics, skills and technology.
‘We’re committed to helping Indonesia grow its domestic supply and increasing the availability of safe, high-quality, nutrient-dense food, that will enhance human nutrition and improve farmer livelihoods.’
Funded through the ACIAR Agribusiness Research Program, the IndoDairy 2 project is a research partnership between CQU, The University of Adelaide, The University of Melbourne, IPB, ICASEPS and UNDIP and is scheduled to run through to April 2029.
Learn more via the ACIAR website.
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