The IndoDairy Smallholder Survey (ISHS)From Farm-to-Fact

Policy Roundtable Discussion9 October 2018

Jack HetheringtonThe Centre for Global Food and Resources,

The University of Adelaidejack.hetherington@adelaide.edu.au

Acknowledgements

• The Australian Centre for International Agricultural Research (ACIAR)– AGB/2012/099: Improving Milk Supply, Competitiveness and Livelihoods of

Smallholder Dairy Chains in Indonesia

• Contributors to this research:

– The Centre for Global Food and Resources (CGFAR), The University of Adelaide:• Rohan Yargop, Jack B. Hetherington, Wendy J. Umberger, Julianne Haensch,

Rida Akzar

– The Indonesian Centre for Agricultural Socio Economic and Policy Studies (ICASEPS), The Indonesian Agency for Agricultural Research and Development (IAARD), The Ministry of Agriculture:• Erwidodo, Handewi S. Purwati, Ening Ariningsih, Erma Suryani, Iwan Setiajie,

Tuti Bastuti

– Australasian Dairy Consultants / Subtropical Dairy:• Brad Granzin

– Bogor Agricultural University (IPB)

– The Indonesian Centre for Animal Research and Development (ICARD), IAARD

2

Factsheets

Factsheet 1: Introduction to the IndoDairy

Factsheets

Factsheet 2: IndoDairy Smallholder

Household Survey Sampling Design and

Survey Roll-out

Factsheet 3: Overview of Household and

Farm Characteristics

Factsheet 4: Farmer’s Attitudes, Perceptions

of Change and Future Aspirations

Factsheet 5: Dairy Farm Inputs

Factsheet 6: Milk Productivity, Price and

Quality

Factsheet 7: Dairy Farming Costs, Revenue

and Profitability

Lembar Fakta 1: Pendahuluan: Proyek

“IndoDairy” & Survei Rumah Tangga Peternak

IndoDairy

Lembar Fakta 2: Survei Rumah Tangga

Peternak IndoDairy

Lembar Fakta 3: Gambaran Karakteristik

Rumah Tangga dan Peternakan Sapi Perah

Lembar Fakta 4: Sikap, Persepsi terhadap

Perubahan, dan Harapan Peternak

Lembar Fakta 5: Input dalam Usaha Ternak

Sapi Perah

Lembar Fakta 6: Produktivitas, Harga dan

Kualitas Susu

Lembar Fakta 7: Biaya, Pendapatan, dan

Profitabilitas

https://www.indodairy.net/resources/ https://www.indodairy.net/publikasi/3

Attitudes and perceptions of change

Attitudes towards technology adoption and changing practices

9%

9%

10%

8%

9%

12%

41%

29%

15%

19%

68%

40%

53%

53%

59%

6%

8%

6%

14%

8%

4%

3%

3%

10%

5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Bandung

Bogor

Cianjur

Garut

Total

Always the first One of the first

Wait to see other's success before I try them One of the last

Never try new technologies

Factsheet 4: Farmer’s Attitudes, Perceptions of Change and Future Aspirations 5

Perceptions: Current rating and changes since 2014

-1.00 -0.50 0.00 0.50 1.00

Price of milk

Price of concentrates

Quality of grass and forages

Availability of land to purchase

Availability of grass and forages

Availability of concentrates

Availability of dairy nutritional information

Availability of technologies to improve milk yields

Availability of marketing information

Availability of credit

Availability of veterinary services

Availability of veterinary medicines

Availability of extension services

Number of milk buyers

Roads in your district

Farmers' perception of change in availability and quality of inputs and services since 2014

Farmers' current rating of availability and quality of inputs and services

Factsheet 4: Farmer’s Attitudes, Perceptions of Change and Future Aspirations 6

Some notable differences between districts

Perceptions: Current rating and changes since 2014

Factsheet 4: Farmer’s Attitudes, Perceptions of Change and Future Aspirations 7

• On average, farmers felt the availability of concentrates was good, but the price was poor and had worsened since 2014.

• Access to forages is an issue facing farmers and has been since 2014. • 45% of farmers felt income from dairy farming had decreased in the last 12

months. However, 90% of farmers have intend to grow their dairy herd.

Some notable differences between districts:• Farmers in Bandung rated the price for concentrates higher than other

districts. • Farmers in Bogor District reported the availability of extension services had

declined.

8

19%

19%

33%

23%

32%

19%

28%

46%

49%

63%

39%

31%

0% 20% 40% 60% 80% 100%

Bandung

Bogor

Cianjur

Garut

Increased No change Decreased

Change in total income received from

milk sales in past 12 months.

36%

34%

33%

26%

28%

25%

28%

38%

36%

41%

40%

36%

0% 20% 40% 60% 80% 100%

Bandung

Bogor

Cianjur

Garut

Increased No change Decreased

Change in total number of dairy cattle in

the past 12 months.

12%

16%

24%

12%

56%

36%

46%

64%

32%

48%

30%

24%

0% 20% 40% 60% 80% 100%

Bandung

Bogor

Cianjur

Garut

Increased No change Decreased

Change in total number of milking cows in

the past 12 months.

15%

15%

30%

21%

37%

23%

31%

46%

48%

63%

38%

33%

0% 20% 40% 60% 80% 100%

Bandung

Bogor

Cianjur

Garut

Increased No change Decreased

Change in total average milk produced per

day in the past 12 months.

Production costs, revenue and profits

Approach for profitability assessment

• Total milk revenue: – fresh milk sales (net milk delivery costs),

– processed milk sales (e.g. yoghurt) and

– the value of milk consumed by household members and calves.

• Variable costs: – Forage costs,

– concentrate and supplement costs,

– feed delivery costs,

– herd costs (health products and veterinary fees, artificial insemination costs and water costs)

• Overheads:– Employed labour costs,

– Other overheads (taxes, electricity costs, cooperative membership, recorder fees and other memberships)

• Other business costs: – Land rent and

– interest on loans

10

Profit/cow/year =

Total milk revenue - (Variable costs + Overheads + Other business costs)

No. of lactating cows

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Total annual revenue

• The average total revenue:– 68 million IDR (USD

$4,695) per annum.

• Bogor = highest annual revenue

• Garut = lowest annual revenue

• This is affected by farm size, total farm milk production, and other factors.

11

70.1

103.1

69.8

42.0

67.9

0

20

40

60

80

100

120

Bandung Bogor Cianjur Garut Total

Re

ve

nu

e (

Mil

IDR

/an

nu

m)

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Cost per litre of milk

• To account for farm size, milk production and other factors – looked at costs per litre of milk produced.

• Average total cost per litre:– 2,750 IDR (USD $0.19/L).

• Highest cost per litre is for concentrates and supplements (e.g. cassava waste).

12

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Bandung Bogor Cianjur Garut Total

Cost (I

DR

/L)

Forage costs Concentrates and supplements

Feed delivery costs Herd costs

Employed labour Other overheads

Other business costs

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Revenue per litre of milk

• Revenue per litre:– 4,760 IDR (USD $0.33).

• Most revenue from fresh milk sales (e.g to KUDs)– 4390 IDR/litre

• Consumed milk:– 300 IDR/litre

• Processed milk sales:– 70 IDR/litre

• Highest = Bogor

13

-

1,000

2,000

3,000

4,000

5,000

6,000

Bandung Bogor Cianjur Garut Total

Re

ve

nu

e (

IDR

/L)

Fresh milk Consumed milk Processed milk

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Opportunity costs – family labour

14

2,749

2,116 2,136

1,634

2,159

2,827

3,327

2,399 2,453

2,749

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Bandung Bogor Cianjur Garut Total

Cost

(ID

R/L

)

Family labour Total costs

• Additional in-kind 20.6 million IDR (USD $1,425) per annum

• Per litre of milk: • 2,159 IDR (USD

$0.15)

• Family contribute almost the same value as total cash costs (especially, Bandung).

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Compare - Costs, Revenue and Profit per litre

15

2,827

3,327

2,399 2,453 2,749

4,703

5,547

4,477 4,578 4,756

1,875 2,220

2,077 2,125

2,007

-

1,000

2,000

3,000

4,000

5,000

6,000

Bandung Bogor Cianjur Garut Total

Valu

e (

IDR

/L)

Production Costs Revenue Profit margin

• Differences between costs and revenue between districts• No significant differences in profit margin

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Profitability

Bandung Bogor Cianjur Garut Total

Annual Profit (Mil IDR/annum) 29.70 45.40 31.60 20.60 29.90***

Number of lactating cows managed 2.84 3.60 3.28 1.79 2.75***

Profit per cow per year

(Mil IDR/cow/year)10.80 13.70 11.30 12.20 11.60

16

Profit/cow/year =

Total milk revenue - (Variable costs + Overheads + Other business costs)

No. of lactating cows

Difference between districts: *** p < 0.01

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Profit quartiles

17

Quartile Description NAverage profit per cow per year

IDR USD1

Quartile 1 Low profits 150 -258,845 -17.90

Quartile 2 Low to mid profits 150 8,831,048 610.74

Quartile 3 Mid to high profits 150 13,800,000 954.39

Quartile 4 High profits 150 23,900,000 1,652.89

1Exchange rate 1 USD = 14,459.50 Indonesian Rupiah on 27 July 2018

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

Comparison of costs and profits per litre by quartiles

18

-

1,000

2,000

3,000

4,000

5,000

6,000

Quartile 1 Quartile 2 Quartile 3 Quartile 4

Valu

e (

IDR

/L)

Forage costs Concentrates and supplementsFeed delivery costs Herd costsEmployed labour Other overheadsOther business costs ProfitFamily labour

Factsheet 7: Dairy Farming Costs, Revenue and Profitability

100%

58%43%

32%

42% 57% 68%

Costs Profit margins

19

Quartile 1 Quartile 3Quartile 2 Quartile 4

Costs and profits (per litre) by quartiles – proportion of total revenue

Distribution of profit quartiles by districts

20

26%

38%

25%

16%

25%

24%

11%

30%

32%

25%

27%

18%

25%

26%

25%

24%

34%

20%

26%

25%

0% 20% 40% 60% 80% 100%

Bandung

Bogor

Cianjur

Garut

Total

Quartile 1 Quartile 2 Quartile 3 Quartile 4

Differences in household and farm characteristics

Q1 Q2 Q3 Q4

48% 56% 57% 53%

What is Different Between Profit Quartiles?

-258,845 8,831,048 13,800,00023,900,000

48.5 42.8 48.4 42.3 44.7 38.8 46.6 41.1

Profitability (IDR/cow/year)

Age

Milking cows

Milk production (L/cow/day)

2.9 milking cows 3.3 milking cows 2.7 milking cows 2.1 milking cows

13.5L/cow 14.6L/cow 15.1L/cow 17.1L/cow

Proportion of miking cows of total herd

Milk price

4,4314,396

4,447

4,5624,554

4,506

4,575

4,709

4,2974,267 4,278

4,391

4,000

4,100

4,200

4,300

4,400

4,500

4,600

4,700

4,800

Pri

ce (

IDR

/L)

Average price Highest price Lowest price

Q1 Q2 Q3 Q423

Milk quality knowledge

41%

57%

4%

58%

40%

23%

28%

0%

14%

22%

0%

10%

20%

30%

40%

50%

60%

70%

Total Solids Fat Content Somatic CellCount

Total PlateCount

Milk Density

Do you know what this is? Do you know the measurement for your milk?

24

Concentrates

97.3%96.7%

94.0%

88.0%

82%

84%

86%

88%

90%

92%

94%

96%

98%

Q1 Q2 Q3 Q4

11%Farmers who know the

quality of their

concentrates

14.3

0

5

10

15Average crude

protein content of

concentrates (%)

(n = 65)

Proportion of concentrate use

(% of farmers)

Knowledge and quality of concentrates

are not different between quartiles, but

they are generally low. 25

Summary

• While revenue and costs are different between districts, profit margins are consistent.

• When farmers were grouped by profitability– The least profitable farmers, on average,

make little to no profits.

– The most profitable farmers make 24 mil IDR per cow per year.

• Most profitable farmers:– Manage costs more effectively, in

particular, concentrates and supplements:

• Possibly suggests they are able to procure cost effective feeds and balance cattle diet

– Achieve the highest milk price, some diversification of income.

26

Summary

• Knowledge of milk quality parameters – generally low

– Understanding of the concept was between 40% and 58% for key factors (TPC, fat, total solids, milk density). Somatic Cell Count was 4%

• This could be improved through training and extension activities

– Awareness of their milk quality measurement was less than 30% for all factors

• This could be improved through investment in equipment

• Knowledge of concentrates quality – very low

– Could be addressed through training and testing/labelling of concentrates.

– Protein content should be aiming for 16% - challenging to access raw materials

– Concentrates are an important element to the diet of dairy cattle (energy, protein and other nutrients).

27

Terima kasih!!!!Jack Hetherington

Research Associate

The Centre for Global Food and Resources

The University of Adelaide

jack.hetherington@adelaide.edu.au

www.Indodairy.net