Local dairy farmers in Indonesia are currently grappling with significant challenges. These include low productivity, milk prices that do not match production costs, and intense competition from imported products. These factors collectively contribute to imbalances in the national milk supply chain, directly affecting the welfare of small-scale farmers.

According to data from BPS-Statistics Indonesia, in 2021, per capita milk consumption in Indonesia for 2020 reached only 16.27 kilograms. This figure is far below the minimum standard set by the FAO, which is 30 kilograms per capita per year. Meanwhile, as of 2024, national fresh milk production stood at 927,874 tons, while national demand reached 4.6 million tons. This indicates that approximately 80 percent of the demand for milk is still met through imports.

The current level of milk production is primarily attributed to the small-scale nature of most dairy farming enterprises, which usually engage only two to five cows per farmer, along with the continued use of conventional farming techniques. The national milk productivity is set at 10 to 15 liters per cow per day, which significantly lags behind countries like New Zealand, where productivity can reach up to 30 liters.

The problems do not stop there. In many regions, farmers sell milk to cooperatives at prices ranging from IDR 3,400 to IDR 5,600 per liter, while market prices can reach IDR 8,000 to IDR 10,000 per liter. This price disparity makes it difficult for farmers to cover essential expenses such as feed, animal health, and operational needs.