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Greenfields eyes higher share in milk industry with new plant
Palaan in Malang, East Java, will see an increased outflow of milk products with the inauguration of dairy producer PT Greenfields Indonesia’s new milk factory, which is located among the village’s rolling hills
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P
alaan in Malang, East Java, will see an increased outflow of milk products with the inauguration of dairy producer PT Greenfields Indonesia’s new milk factory, which is located among the village’s rolling hills.
The factory, worth Rp 335 billion (US$25.18 million) and built on 7 hectares of land, is expected to run 100 percent of its capacity, producing 70 million liters of milk annually by late 2018. This is in addition to the 40 million liters produced in Greenfields’ first factory in Babadan village in the same regency.
Greenfields — controlled by Japfa Pte Ltd through AustAsia Dairy Group — expects the two factories to help achieve its target of winning a 12 percent market share in the country by the end of 2018, a significant increase from 5 percent today.
“We see plenty of opportunity to bring out new, fresh and innovative dairy products using really [high-quality] milk,” Edgar Collins, managing director at AustAsia Dairy Group said after the launching event.
Indonesia, a country of roughly 258 million people, has a per capita milk consumption of only
12.1 kilograms (kg) per year, per person, lower than that of neighboring countries, like Malaysia with 36.2 kg, and Thailand with 22.2 kg.
Greenfields earns 70 percent of its sales from selling various dairy products, ranging from milk and yoghurt, to whipped cream and cheese, in the domestic market. The remaining 30 percent comes from exports to seven cities and countries, namely Hong Kong, Singapore, Malaysia, Brunei Darussalam, the Philippines, Myanmar and Cambodia.
Producing greater volumes of milk annually means the firm would also require more cows, thus it held a groundbreaking on Wednesday for its second farm worth Rp 600 billion in Wlingi village in Blitar, East Java.
Next year, the 172-ha farm will be able to accommodate a total of 9,500 cows to produce milk that will be processed in Greenfields’ second factory. The first stage will see 2,000 Holstein cows arrive from Australia in August.
Meanwhile, Greenfields’ first 50-ha farm in Babadan accommodates 8,619 cows, producing 115 tons of milk daily.
Witnessing the launch of Greenfields’ new factory, Industry Minister Airlangga Hartarto called on the firm to boost partnerships with small farmers as it currently supplied 100 percent of its milk from its own farm.
Currently, 250 small farmers indirectly benefit from the company, aside from its 500 employees, said Greenfields head of manufacturing Darmanto Setyawan.
Local residents supply Greenfields with feeds of corn and sugarcane leaves growing abundantly in the area. However, the firm plans to develop the Greenfields Institute of Dairy Farming and assist 5,000 farmers in upgrading their cattle businesses with modern methods and larger economies of scale in the long run.
“With the institute, we hope Greenfields can help farmers maintain 10 cows per farm, from only two to three head [of cattle] today. With 10 [cows] per family, a farmer can have a proper wage of Rp 2 million per month,” Airlangga said.
Milk production in Indonesia only grew by 2.1 percent to 852,951 tons in 2016, enough to fulfill 23 percent of industrial milk demand, due to cheaper imported milk, lack of infrastructure and insufficient local knowledge on dairy processing.
The government targets to increase local milk production and fulfill 41 percent of national demand by 2021. It is formulating a road map to achieve this goal by reviewing an obligatory partnership scheme with small farmers, among other methods.
