New Zealand-based milk producer Fonterra launched on Wednesday the construction of its factory in Cikarang, West Java, with capacity to produce 87,000 packs of milk per day.
The Rp 357 billion (US$31.4 million) plant is expected to provide 150 new jobs.
Pascal de Petrini, Fonterra’s managing director for Asia Pacific, the Middle East and Africa, said the plant, scheduled to start operations in March 2015, would initially procure its raw materials entirely from New Zealand.
“We are not yet considering local sourcing of milk,” De Petrini told The Jakarta Post after a ceremony to mark the official start of construction.
Although raw materials will be imported entirely from New Zealand, Fonterra, in cooperation with the Agriculture Ministry, has a long-term plan to train and educate Indonesian farmers.
“We have begun programs to develop local milk sources through a training program for Indonesian farmers in New Zealand,” said De Petrini.
He said that last year, 12 dairy farmers from Java and West Sumatra were selected to join 10 weeks of training in New Zealand on cattle farming, quality control and the development of cooperative organization and development.
“We will send 12 more farmers this year for a similar training program in the hope these farmers will eventually become agents of development in cattle raising in Indonesia,” De Petrini said.
“I hope with the farmer training program our local farmers can later supply the basic materials needed to be manufactured,” Agriculture Ministry director general for agro industry Panggah Susanto told reporters after the ceremony.
At the moment, Indonesia still imports Fonterra’s finished dairy products such as Anlene, Anmum and Anchor Boneeto brands from countries like New Zealand and Malaysia.
Fonterra, a cooperative owned by more than 10,600 farmers, accounts for nearly 20 percent of the world’s dairy exports.
It began marketing its products in Indonesia in the 1970s under the Anchor Boneeto, Anlene and Anmum brand names.
Fonterra sees great growth potential in Indonesia, which has more than a 240 million population as well as 2.5 percent of new borns every year. Its per capita milk consumption is only 11 liters, compared to over 50 liters in Singapore.
With the growing number of affluent people in the country, Fonterra projects dairy consumption in Indonesia, which grew by 12 percent annually over the last five years, will further increase by 50 percent over the next eight years.
Fonterra now has four plants in Asia, two located in Sri Lanka and the other two located in Malaysia. It also has three dairy farms in China.
According to Reuters, Fonterra on Wednesday reported a 41 percent fall in first-half earnings after higher input costs from soaring global dairy prices and a lack of capacity to process record-high milk volumes into higher-yielding products hit its margins.
Despite the steep hit in its first-half earnings, Fonterra is still pushing on with plans to benefit from the increasing dairy demand in countries where growing middle classes are developing a voracious appetite for cheese, milk formula and other products.
Source The Jakarta Post