Project final report

Improving milk supply, competitiveness and livelihoods of smallholder dairy chains in Indonesia - Final Report

Date released
23 January 2023
Publication Code

Jack Hetherington; Prof Wendy Umberger; Dr Rida Akzar; Dr Brad Granzin; Zita Ritchie; Prof Arief Daryanto; Dr Sahara; Prof Erwidodo; Prof Handewi Purwati; Prof Atien Priyanti; Dr Endang Romjali; Vyta W. Hanifah


This project aimed to understand and address the growth-limiting constraints faced by smallholder dairy farmers in West Java, including institutional, government, socio-economic, technical, and post-farm gate impediments. Value chain activities and baseline smallholder surveys were undertaken to better understand the key limiting factors and opportunities to address these factors.

Smallholder dairy farmers, which produce most of Indonesia’s domestic milk production in the main dairy production region of West Java, face a multitude of constraints. These constraints limit on-farm efficiency, farm growth and profitability, as well as the quality, safety, and quantity of Indonesia’s domestic supply of dairy products. This project aimed to tackle some of growth-limiting issues facing Indonesia’s smallholder dairy farming households.

Whole-of-chain research and participatory development activities with key stakeholders (including smallholder farmers, input suppliers, processors, and policy makers) in the value chain were undertaken to:

  • Identify and recommend strategies and policies to support development of sustainable and profitable smallholder-inclusive dairy supply chains in North Sumatra and West Java
  • Identify barriers to adoption of profitable management practices and develop strategies to inform the development of extension programs in West Java and North Sumatra, and
  • Develop, pilot, and evaluate best-bet dissemination to improve adoption of innovative dairy management practices by smallholder farmers in West Java.

The research activities revealed issues throughout the supply chain. The smallholder-dominated domestic dairy sector had very low economies of scale, and growth was impeded by limited forage availability, poor-quality inputs, low animal reproductive performance, poor mastitis management practices, and poor milk quality.

Smallholder farmers’ knowledge and skills in related technical areas were limited at the inception of the project. Business management skills were also lacking.

Various socio-economic and agro-economic barriers appeared to contribute to low adoption of available knowledge and technology; and these barriers limited on-farm efficiency, farm growth and profitability.

Analysis of data from the baseline household study of 600 dairy farming households located in West Java revealed that smallholder dairy farmers were heterogeneous in their socioeconomic characteristics, and these characteristics uniquely influenced farmers’ access to relevant services and technologies and their ability to adopt technologies and management practices. The unique needs of farmers identified in the baseline study and the value chain analysis was used to develop innovative development activities, including participatory extension approaches to drive on-farm practice change.

The innovative participatory extension approaches and inclusive value chain activities (e.g., incentives paid to smallholders to improve milk quality) undertaken as part of this project resulted in positive outcomes with respect to improvements in farmers’ knowledge, attitudes, and adoption of relevant technologies and management practices. However, farmers’ adoption of some technologies was hampered by poorly functioning institutions that limited farmers’ access to information and to affordable technology and inputs.

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