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Livestock identification mission
0
2013
Final report
Identification Mission
5/20/2013
Identification Mission on the Livestock
Component of the Dutch-Indonesian
Programme on Food Security
Livestock identification mission
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This report is compiled by the mission team recruited by the Dutch
Embassy in Jakarta. The mission team comprised four experts:
• Mr Frank Joosten (team leader), Advance Consulting, the
Netherlands; www.advanceconsulting.nl
• Dr Ivo Claassen, Animal Sciences Group, Wageningen University &
Research, the Netherlands; www.wur.nl
• M. Gerhard Veldink, HVA International, the Netherlands;
www.hvainternational.nl
• Professor. Dr Ahmad Suleiman, Institut Pertanian Bogor (IPB);
www.ipb.ac.id
The views and opinions expressed in this report do not necessarily reflect
those of the Embassy or of any other stakeholders in the Indonesian
livestock sector.
Livestock identification mission
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Table of Contents Executive summary ................................................................................................................................. 2
List of abbreviations ................................................................................................................................ 4
1. Introduction ......................................................................................................................................... 6
1.1 Background & objectives ............................................................................................................... 6
1.2 Programme of the mission ............................................................................................................ 7
2. The poultry value chain in West Java .................................................................................................. 8
2.1 Production and consumption of poultry products ........................................................................ 8
2.2 Food safety and animal health issues ......................................................................................... 10
3. The dairy value chain in West Java .................................................................................................... 12
3.1 Production and consumption of dairy products ......................................................................... 12
3.2 Dairy processing industry ............................................................................................................ 13
3.3 Milk producers ............................................................................................................................. 14
3.4 Feed situation .............................................................................................................................. 15
3.5 Milk collection system ................................................................................................................. 16
4. Development of a food security programme .................................................................................... 19
4.1 Situation analysis ......................................................................................................................... 19
4.1.1 Poultry sector ....................................................................................................................... 19
4.1.2 Dairy sector........................................................................................................................... 20
4.2 Objectives .................................................................................................................................... 20
4.3 Areas of intervention ................................................................................................................... 21
4.3.1 Poultry sector ....................................................................................................................... 21
4.3.2 Dairy sector........................................................................................................................... 22
4.4 Programme scope and implementation approach ..................................................................... 23
5. Programme management and implementation ............................................................................... 25
5.1 Programme management issues ................................................................................................. 25
5.2 Implementation partners ............................................................................................................ 27
5.3 Liaison with other initiatives in the sector .................................................................................. 28
5.4 Work plan and cost estimate ...................................................................................................... 29
Annex A: Terms of Reference ................................................................................................................ 30
Annex B: Food security mission program 09-19 April 2013 .................................................................. 33
Annex C : Explanation on NKV food safety standards for meat sector ................................................. 38
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Executive summary
The Dutch Embassy in Jakarta organised a mission in April 2013 with the objective to develop a
coherent programme on food security and agribusiness for the livestock sector that leverages both
development assistance and commercial opportunities. The mission was expected to assess the
needs and opportunities in the dairy and poultry sub-sectors in West Java and based on their findings
formulate a set of objectives for the livestock component of the Dutch-Indonesian food security
programme.
The main findings and recommendations are summarised below:
� With an increasing demand and consumption of poultry meat the poultry industry will make
investments in upgrading and expanding the production capacity in primary production,
processing, logistics and marketing. This provides opportunities for improving the overall
standard in production, quality and safety that can be supported through the new project.
Meeting food safety standards is a precondition for further growth and development of the
poultry meat sector.
� In terms of needs and opportunities in the dairy sector the main complementary field that
requires support is related to the animal feed quality and supplies. In terms of production costs
animal feed is by far the most important factor and in terms of milk productivity the most
limiting production factor in the current dairy production systems. The two main areas of
improvement identified are: (a) the qualitative and quantitative roughage supplies will have to
improve; and (b) the price/quality ratio of the concentrated feeds will have to reduce.
� The overarching goal of the Dutch – Indonesian cooperation in the field of food security and
agribusiness development in the livestock sector is to develop viable models for domestic
production and consumption of affordable, nutritious and safe animal-based products.
� Through this cooperative programme a contribution will be made in relation to the following
impact areas: (a) sustainability in production and domestic supplies of poultry meat and dairy
products; (b) provision of sustainable income-generating opportunities for smallholder producers
in poultry and livestock sectors; (c) improvement of the overall standards of animal health,
welfare and food safety.
� The proposed programme will comprise have two components directed at the two respective
sub-sectors, each with its own set of specific results and interventions:
Expected results for the Poultry Sector
Programme Component
Expected results for the Dairy Sector
Programme Component
a. Enhanced consumer awareness on food
safety issues and poultry meat related
health hazards
b. HACCP standards adopted by poultry
slaughterhouses in Western Java
c. Higher income levels of broiler farmers
producing quality poultry meat.
a. Consistent availability of roughages with a
higher nutritional value
b. Dairy farmers’ access to better quality
concentrates
c. Enhanced capacities of the KUDs and
regional extension staff on dairy cattle
nutrition, fodder production and fodder
conservation.
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� To achieve the results listed below the recommended implementation approach is to include
aspects of policy advice, pilots, business-to-business development and capacity building. These
main elements are summarised in the diagram below, whereby capacity building and
institutional support will be an integral aspect of each of the other three intervention areas.
• support public-private cooperation and advice on public policies, service delivery, standards and enforcement issues
policy advice
• demonstrate advanced and practical solutions with substantive ambitions in relation to the issues and challenges identified in the two subsectors
pilots
• create platforms for more effective business cooperation between chain partners, including Indonesian - Dutch business cooperation
business-to-business
Ca
pa
city
Bu
ild
ing
an
d
Inst
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tio
na
l S
up
po
rt
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List of abbreviations
AI Artificial Inseminations
ACIAR Australian Centre for International Agricultural Research
APRINDO Asosiasi Pengusaha Ritel Indonesia (Indonesian Retail Merchants
Association)
ARPHUIN Indonesian Poultry Slaughterhouses Association
B2B Business – to – Business
CC Chilling Centre
CP PT Charoen Pokphand
DGLAHS Directorate General of Livestock and Animal Health Services
DOC Day Old Chicks
EKN Embassy of the Kingdom of the Netherlands
EU European Union
FAO Food and Agriculture Organisation (of the United Nations)
FCR Feed Conversion Rate
FFI PT Frisian Flag Indonesia
FMPI Federasi Masy Perunggasan Indonesia (Indonesian Poultry Forum)
GAIN Global Agricultural Information Network
GAPPI Indonesian Poultry Association
GKSI Gabungan Koperasi Susu Indonesia (Union of Indonesian Dairy
Cooperatives)
GMP Good Manufacturing Practice
GOPAN Indonesian Poultry Farmers Organisation
HACCP Hazard Analysis and Critical Control Points
HPAI Highly Pathogenic Avian Influenza
IDR Indonesian Rupiah
IFC International Finance Corporation
ILO International Labour Organisation
IPB Institut Pertanian Bogor (Bogor Agricultural University)
IPS Industri Pengolahan Susu (Association of Milk Processors)
JICA Japan International Cooperation Agency
KAP Knowledge, Attitude and Practices
KPS Koperasi Peternak Sapi (Bogor KUD)
KPBS Koperasi Peternak Bandung Selatan (Pangalengan KUD)
KPSBU Koperasi Peternak Susu Bundung Utara (Lembang KUD)
KUD Koperasi Unit Desa
LAIC Lembang Artificial Insemination Centre
LEI Dutch Agricultural Economic Institute (Wageningen UR)
MoA Ministry of Agriculture
MCP Milk Collection Point
ME Metabolic Energy
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MT/Mt Metric Ton (1,000 kg)
NGO Non Governmental Organisation
NKV Norm Kualitas Veteriner
OECD Organisation for Economic Cooperation and Development
PINSAR Indonesian Poultry Farmer Association and Information Center
PPP/FDOV Public Private Partnership facility for Sustainable Entrepreneurship and
Food Security
RI Republic of Indonesia
SNF Solids Non-Fat
SNI Indonesian National Standard
SOP Standard Operating Procedure
TPC Total Plate Count
TS Total Solids
USAid United Stated Agency for International Development
NZAid New Zealand Aid Programme
WHO World Health Organisation
WUR Wageningen University & Research centre
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1. Introduction
1.1 Background & objectives
Achieving self-sufficiency in the production of agricultural commodities is the Indonesian
Government’s main approach to assuring food security. The Government is concerned not only with
producing enough of the most important agricultural commodities, but also ensuring that prices are
affordable for consumers in different parts of the country. Linked to this food self-sufficiency policy is
the objective to diversify agricultural production and consumption away from carbohydrates (rice
and wheat) towards animal-based products and fruits and vegetables. Another objective is to raise
the level of competitiveness of agricultural production and value-added processing. Improving the
welfare of farmers through higher incomes is also a desired policy outcome to reduce the level of
rural poverty.
In recent years the objective of food-self sufficiency has been the main driver for various policy
measures applied in Indonesia. The OECD1 concludes that food self-sufficiency does not necessarily
address the core elements of food security. The country can be self-sufficient in food production, but
still food insecure if people do not have enough income to buy food. The World Food Summit of 1996
defined food security as existing “when all people at all times have access to sufficient, safe,
nutritious food to maintain a healthy and active life”. Commonly, the concept of food security
includes both physical and economic access to food that meets people's dietary needs as well as their
food preferences. Food security is therefore built on three pillars2:
� Food availability: sufficient quantities of food available on a consistent basis.
� Food access: having sufficient resources to obtain appropriate foods for a nutritious diet.
� Food use: appropriate use based on knowledge of basic nutrition and care, as well as adequate
water and sanitation.
The Dutch Government wants to cooperate with the Government of Indonesia to strengthen the
food security situation. This bilateral food security programme centres on the priority commodities
identified by the Indonesia Government. In 2012 a mission developed a programme for the vegetable
and fish farming sector. In addition the Dutch and Indonesian Governments agreed to cooperate also
in the livestock production sector, with a main focus on the poultry and the dairy sub-sectors. In April
2013 a group of four experts were recruited by the Dutch Embassy in Jakarta to assess the needs and
opportunities in these two sub-sectors and define the scope for a bilateral food security programme
in the period 2013 – 2015.
The Dutch food security support foresees outcomes in one or more of the following areas:
� Sustainable increase in food production
Intermediary outcomes could include more efficient use of land, energy and water; conservation
of natural resources; enhanced productivity; resilience of the production systems; sustainable
supply chain arrangements; assured access to land, water and knowledge
� More efficient markets
1 OECD Review of Agricultural Policies: Indonesia 2012
2 World Health Organisation; http://www.who.int/trade/glossary/story028/en/
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Intermediary outcomes could include improved market transparency and institutional
arrangements; adequate market infrastructure and trade financing; absence of market
distortions; improved market access for small producers
� Improved access to healthy food
Intermediary outcomes could include enhanced income security, better livelihood development
and/or employment opportunities for disadvantaged groups in society; availability of healthy and
safe food
� Enabling environment for private sector development
Intermediary outcomes could include adequate enforcement of market related rules and
standards; adequate public infrastructure; well functioning financial markets; innovation support
through knowledge and research.
The central objective of the mission was to develop a coherent programme on food security and
agribusiness for the livestock sector that leverages both development assistance and commercial
opportunities. This should lead to the definition of clear objectives for the livestock component of
the Dutch-Indonesian food security programme with a reference to one or more of the desired
outcomes listed above. The identification mission used the following criteria while reviewing
different interventions and support activities in the respective livestock sub-sectors:
� Supportive of a sound business case
� Leading to significant food & nutrition security improvements
� Partnership opportunities with private sector initiatives & possibilities to strengthen existing
private sector momentum in the respective sub-sectors
� Compatibility with the Indonesian policies and objectives for the respective sub-sectors
� Complementarity / no duplication with other donor support initiatives.
A copy of the Terms of Reference for this mission is included in Annex A.
1.2 Programme of the mission
The mission team had extensive consultations with staff from the Dutch Embassy in Jakarta (EKN)
and the Directorate General for Livestock of the Ministry of Agriculture. At the beginning of the
mission scoping discussions with EKN and DG Livestock were held and towards the end of the main
findings and recommendations were discussed during debriefing meetings.
The mission programme also comprised visits and discussions with the following groups of
stakeholders in the sector:
� Other international donor agencies active in the livestock sector (USAid, NZAid, AusAid, FAO)
� Dutch and Indonesian companies active in the sector (including PT Frisian Flag Indonesia,
Nutreco, ISA Poultry, Japfa, Sierad, Carrefour, Hypermart, CP)
� Sector organisations (e.g. APRINDO – retail; FMPI – poultry Society)
� Indonesian experts at IPB Bogor (Faculty of Animal Sciences, Faculty of Veterinary Medicine and
Faculty of Human Ecology)
� Dairy Cooperatives (KPS in Bogor, KPBS in Pangalangan and KPSBU in Lembang)
� Provincial and District level officials in the Livestock sector in Bogor, Bandung and Lembang.
A copy of the programme is included in Annex B.
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2. The poultry value chain in West Java
2.1 Production and consumption of poultry products
Poultry products (meat and eggs) are the most important animal protein source for the Indonesian
consumers. In Indonesia the demand for poultry products is increasing. Over the past 5 years the
demand for poultry meat has doubled to its current level of 11.2 kg per person per annum and it is
expected that in the next 5 years the demand will double again. Both in real and relative terms the
consumption increases of poultry meat and eggs have been larger than in any other livestock sector
in Indonesia (see figure 1). This increase is mainly driven by a growing population and a growing
middleclass in urban areas. The production and marketing of poultry products needs to undergo
significant changes to be able to supply enough, safe and affordable poultry products to the
Indonesian consumers.
Figure 1: changes in livestock production in Indonesia 1990 - 20093
The current poultry value chain is very diverse and knows many stakeholders. The current production
of broilers is estimated at 2.2 billion birds per year, but accurate figures are lacking. Spent layer hens
(130 million per year), male layers (80-100 million per year), ayam kampung (backyard poultry) (700
million per year) and ducks (unknown) constitute the remainder of poultry meat consumption. The
focus in this analysis will be on the value chain of broilers.
The industry has grown rapidly since 2008 and is expected to continue this growth, due to increasing
demand in the future4. Poultry is produced by commercial farms but also in backyard farming
systems. Roughly three distinct modes of poultry production exist;
� Corporate vertically integrated production systems that produce, process and market the
produce, often through modern retail outlets such as supermarkets, fast food and restaurant
chains (3-5% of the national market)
3 Source: OECD Review of Agricultural Policies: Indonesia 2012
4 http://www.worldpoultry.net/Breeders/General/2011/2/Report-Indonesian-poultry-industry-looks-
promising-in-2011-WP008459W/
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� Commercial production systems, largely making use of the same resources, DOCs and feed,
but in this model relying on contract farmers for production and on middlemen and wet
markets for collection, distribution, slaughtering and marketing. This production system is
extremely important for supplying large urban areas.
� Family farming in more traditional production systems that produce for the local markets;
supply chains are shorter and most of the ayam kampong is produced and traded in this way
A few foreign investment companies are the main suppliers for day old chicks (DOCs) and feed for
the production of broiler chicken: Charoen Phokphand (CP) from Thailand, Sierad from Malaysia and
one Indonesian company, Japfa Comfeed5. These large companies have established cooperation
contracts with small farmers by supplying DOC, feed , medicine and vitamins. The companies are
involved only by helping the poultry farmers to keep the chicken healthy and grow to be ready for
harvest. Other partnership systems exist which are based on contract prices. The minimum
production size for farms to participate in this system is 5000 birds. In general these contract farms
have low biosecurity in place and hence a high risk of disease outbreaks and contamination.
Figure 2: common production & marketing chain of poultry meat6
The supply of sufficient numbers of DOC has sometimes been problematic due to the disease
situation in the country, notably due to H5N1 highly pathogenic avian influenza. Chicken feed is
relying on imports of raw material. The quality of the feed itself is not a problem. Farmers complain
about the price. Feed constitutes approximately 70% of the production costs in the broiler industry.
5 http://www.datacon.co.id/Livestock1-2009.html
6 AusAID (2008); A scoping study investigating opportunities for improving biosecurity on commercial poultry
farms in Indonesia
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2.2 Food safety and animal health issues
Many small broiler farms, contract and independent, produce birds that are eventually intended to
be sold to customers in urban areas. In 2007, approximately 0.8 – 1.0 million live birds were
transported daily to collector yards in Jakarta. Usually the same day these birds are slaughtered on
site or in small home slaughtering facilities, and carcasses are brought to local markets to be sold to
customers. There are about 250-300 collector yards and a few thousand home slaughtering facilities
in Jakarta. Studies in 2007 and 2008 showed that 80% of the collector yards were contaminated with
live H5N1 HPAI. The government of Jakarta approved legislation that should lead to market
restructuring and regulate collecting and slaughtering. Implementation of this regulation was
envisaged from 2010, but has not yet been enforced, because of resistance of stakeholders
(middlemen, traders, transporters, slaughterers).
Officially, commercial home slaughtering is illegal, but there is no law enforcement on this topic.
There are several thousands of these facilities in Jakarta alone, which make inspection and law
enforcement without other drivers for change very difficult. This type of marketing and slaughtering
practices causes environmental, food safety and veterinary health risks. Also, it is very unlikely that
this system can cope with the growing demand in poultry products. Veterinary health risks in this
system are associated with poor cleaning and disinfecting of the trucks that transport birds between
farms and collector yards, and poor biosecurity measures along the entire chain. Animal welfare
issues are present throughout the entire production chain but especially so for transport and
slaughtering.
Approximately 10% of the total demand of poultry is produced in a more integrated way, and are
slaughtered in a more or less industrial setting. These slaughterhouses are partly certified after
inspection by the authorities under the NKV (Norm Kualitas Veteriner) system of the government.
Annex C contains a summary explanation on the NKV standards. In West Java only 12
slaughterhouses with small capacity are NKV accredited. The main market demand for poultry in this
value chain comes from fast food chains (e.g. MacDonalds, KFC), Supermarkets (e.g. Carrefour,
Hypermart), luxury hotels and restaurants. An interesting initiative by PT Sierad , one of the country’s
large integrators, is the BelMart outlet chain7. Shops in the Jabodetabek area sell high quality, locally
produced, cooled poultry carcasses and processed poultry products.
A recent development in broiler production is large scale production (25000 birds) in closed house
systems. These systems have a lower disease risk and better utilization of resources. A collaboration
between CP and the IPB Faculty of Animal Sciences is currently investigating the suitability of these
production systems for Indonesia. This production system requires the development and
construction of large automated slaughtering and processing plants, which are currently not present
in Indonesia.
Consumer demand is for relatively light carcasses (0.8-1.2 kg). This has effects on the efficiency of
production and broiler production does not take full advantage of the high food conversion potential
(FCR). It has often been speculated that producers prefer short production cycles because of
increasing disease introduction risks in longer cycles. Vaccination against Gumboro disease and
Newcastle disease is common in broiler farms. Vaccination against Avian Influenza is not practiced or,
in some cases, only during the wet season when the perceived risks are high.
7 http://belmart.co.id/
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Also consumers have little awareness on safety and quality issues related to meat production and
consumption. Consumers appear to prefer warm carcasses over frozen or cooled ones. In the
absence of consumer demand for safer and more hygienic poultry meat, the industry is not likely to
change its behaviour.
Figure 3: examples of unhygienic slaughter conditions
NKV certified abattoir near Bogor Situation at wet market
Government-owned abattoir in Bogor region
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3. The dairy value chain in West Java
3.1 Production and consumption of dairy products
Traditionally Indonesia is not a dairy production country. Since independence the consumption
gradually increased and is currently around 11 kg/capita/year8, one of the lowest of the ASEAN
countries but annually increasing with 8 - 10%.
The major dairy factories are all located on Java (PT Frisian Flag Indonesia (FFI), Indomilk, Nestlé,
Ultra Jaya, Sari Husada (Danone)). All dairy factories buy raw milk from dairy cooperatives (Koperasi
Unit Desa, KUDs) to supplement the reconstituted milk from imported milk powder. Domestic
production comprises around 30% of the total milk requirement; the remainder is imported. In 2012
Indonesia imported 205,000 MT of Non-fat-dry-milk (skimmed milk powder, etc.) and 56,000 MT
whole milk powder9. It is estimated that annually about 930,000 Mt of raw milk is produced
10 in
Indonesia. The milk production is concentrated in the higher altitude areas of Java with mainly
smallholder dairy farmers (3 – 20 head of cattle, 1 – 10 breeding cows). According to the census of
2011 there were about 597,000 dairy cattle in Indonesia11
of which 99.2% were located on Java.
Until 2012 the national dairy herd was increasing with an average rate of about 2.5% per year12
.
Since 2012 the numbers have declined with about 1.5% per year. The reduction in dairy cattle herd
sizes is mostly attributed to the relatively high beef prices (as a result of the beef quota) and the high
concentrate prices (caused by the high world market prices for raw materials in combination with the
lack of economies of scale in sourcing raw materials). Several KUDs complained that because of the
high meat and feed prices, smallholders sell their cows at the end of the lactation and do not keep
them till their next calving. The collected milk volumes have consequently decreased significantly (by
20 – 30%)13
. In particular the high beef prices have a significant negative impact on the dairy herd
numbers and the volume of milk collected.
The highest concentration of KUDs can be found in East Java (51 KUDs mostly delivering to Nestlé)14
and in West Java (23 KUDs, mostly delivering to FFI, Ultra Jaya and Indomilk). The KUDs organise the
milk collection from the smallholder dairy farmers, the cooling, testing and transportation to the
dairy factories. For the smallholder dairy farmers the KUDs are their only means to supply the dairy
industry and obtain fair prices for their raw milk produced.
Table 1 : Major Dairy Cooperatives in West Java and average daily collected volumes (April 2013)
Cooperative Location Avg. daily total volume (Mt/day)
KPSBU Lembang 112
KPBS Pangalengan 90
Bayongbong West Java 18
Sarwa Mukti West Java 10
Saluyu – K. West Java 7
Source: Consultants investigations
8 USDA Foreign Agricultural Service, Global Agricultural Information Network (GAIN) October 2012; GKSI.
9 USDA Foreign Agricultural Service, GAIN Report Number ID1232
10 Improving milk supply, competitiveness and livelihoods in smallholder dairy chains in Indonesia, ACIAR, 2012
11 Indonesian Livestock and Animal Health Statistics 2011
12 Faculty of Animal Sciences, Bogor Agricultural University
13 Verbal information from KPBS, KPSBU and other KUD
14 Improving milk supply, competitiveness and livelihoods in smallholder dairy chains in Indonesia, ACIAR, 2012
Livestock identification mission
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In addition to the larger KUDs listed in Table 1, there are another 15 smaller farmer groups and KUDs
in West Java that also collect milk and sell to the dairy factories.
3.2 Dairy processing industry
The dairy industry in Indonesia is heavily involved in the milk production sector. Next to buying the
raw milk from the cooperatives it provides loans, technical assistance, training, quality control
support (e.g. ring tests), quality incentives through their pricing policies, management support to the
KUDs, quality inspections, etc.
Table 2: Major dairy Industries on Java and their main products
Dairy Industry Location Products manufactured
Frisian Flag
Indonesia
West Java (Jakarta) Liquid milk, Sweetened Condensed Milk
(SCM), Milk powder
Indomilk West Java (Jakarta) Liquid milk, SCM, ice cream
Nestle East Java (Pasuruan) Condensed Milk, Milk powder
Ultra Jaya West Java (Bandung) Liquid milk, SCM, Milk powder
Sari Husada
(Danone)
Central Java (Yogjakarta) Liquid milk, yoghurt, Milk powder
Greenfields East Java (Malang) Liquid milk
Garuda Food West Java (Bogor) Liquid milk
Cimori West Java (Bogor) Liquid milk, Yoghurt
Diamond West Java (Bekasi) Liquid milk, ice cream
Source: Dairy Industry Development in Indonesia, IFC, 2011 and information collected
FFI also has invested substantially in milk quality improvement projects (KPSBU (Lembang), KPBS
(Pangalengan), Mojosongo, etc.). The latest initiative of FFI is a project which has been submitted for
financial support from the Dutch Government and will particularly focus on milk hygiene, milk
cooling and milk quality control at various larger cooperatives West Java. This PPP/FDOV project also
has an extension component focusing on productivity issues and milk hygiene and management of
the MCP and CC.
Over the last 15 years the dairy industry via IPS has
introduced in steps, a price differentiation for better
quality milk. This hygienic quality expressed as Total
Plate Count (TPC; derived from number of colony
forming units per ml) can give the KUDs a bonus of up to
IDR 500/kg (some 12.5% of the milk price). If the KUD
implements a hygienic quality control programme and a
price incentive based on resazurin grades, the payment
groups (and the individual farmer) can benefit from the
incentives given by the dairy industry to the KUDs.
The dairy industry also promotes larger farms as a
means to obtain better quality milk and reduction of
transaction costs in the supply chains. About 10 years ago Ultra Jaya established already a dairy
village. KPSBU also has developed plans to establish such a dairy village. All these initiatives are
Figure 4: farmer milking
Livestock identification mission
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aiming at obtaining economies of scale, something that is lacking seriously in the dairy farming
sector.
3.3 Milk producers
The bulk of the raw milk is produced at smallholder dairy farms. There are only a handful of large
dairy farms on Java. The smallholder farms can in general be divided in three categories15
:
a) 2 – 4 cows smallholder farms. The farms in this category are often landless, have poor
housing facilities and are not hygienic. Up to 50% of members of some KUD’s are landless
dairy farmers. The farmers collect the roughages (grass, crop residues, etc.) along the road,
fields, in the forest, etc. There are also smallholder farms in this category that are mixed
farmers with some fodder production and crops or vegetables. The production systems are
characterised by low input – low output systems and the economic viability of most of these
systems is very limited. Very few dairy farmers in this category expand to the second
category farms.
b) 5 – 10 cows smallholder farms. The farms in this category cultivate fodder and/or purchase
additional fodder. The farms can be specialized or mixed farms. These farmers are in general
willing and able to adjust their practices and improve the milk productivity and quality. These
farms can be considered as marginal entities and need to grow to comply with the increasing
standards. The farms in this category can with good management grow and expand to the
next category.
c) 10 – 20 cows dairy farms. These are specialized dairy farmers with often own fodder
production, better genetics and a better use of the agricultural by-products as
supplementary feeds (tofu waste, cassava waste, rice bran, etc.). However, in West Java also
these farms have a problem to produce sufficient roughage, in particular during the dry
season. These farms are large enough to invest in fodder conservation and better housing
systems if given the technical support. In general these are the most economically viable
farms. These farms are –if managed properly – sustainable.
The quality of the raw milk is directly depending on the animal health (mastitis!) and the hygienic
practices throughout the supply chain. A quick cooling of the milk to slow the bacterial growth is the
most crucial factor. Most KUD’s have Extension Workers who train and guide the farmers to improve
their hygienic conditions. However, the housing conditions (in particular at the smallest dairy
farmers) are not always appropriate for producing clean milk with a low TPC.
To improve the milk quality a number of recommended practices must be consistently applied: (a)
the current emphasis on clean milking, (b) sampling ever smaller payment groups - to have the
individual farmers see the effects of his own activities on the milk price received; (c) reducing the
time from milking to cooling (d) improving the housing facilities (e) improving the hygiene of the
containers, bulk trucks. To implement and stimulate these activities the dairy processing industry
together with the dairy cooperatives are in the best position to enforce the standards. The proposed
PPP/FDOV project initiative of FFI is in line with the above recommendation and will be
complementary to the mission’s recommendations as outlined in chapter 4 below.
15
Livestock Department of the Ministry of Agriculture and other sources
Livestock identification mission
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The drive towards larger dairy farms will also result in better quality milk as these farms will be able
to invest in proper cooling facilities. For these farms the availability of good price / quality
concentrates is essential. Nutritional knowledge is even on these farms, still lacking.
3.4 Feed situation
The animal feed costs comprise about 85% of the total farm production costs. Research from IPB
shows that one third of the feed related costs are for the production, collection and purchases of
roughage. The other two thirds are for the purchase of concentrates16
. Despite the high relative
costs, the price/quality ratio of feed is generally poor. This particularly applies to the concentrates
and the purchased by-products.
Some 40 - 50% of the smallholder dairy farmers do not own land on which they can cultivate fodder.
They cut grass along the roads, fields, in the forest, etc. Most cows consequently get (seasonally)
rations based on a minimum roughage feeding. Only seasonally (rainy season) they can get ad-lib
roughages. This is the major bottleneck for smallholder dairy farmers to expand their dairy farm,
particularly for those without access to land and sufficient labour.
Larger smallholder dairy farmers tend to cultivate mono cultures of elephant grass. Few farmers mix
leguminous plants with the grass in order to enhance the protein content in the ration. The cut grass
(along the roads, field, forest, etc.) is also of poor quality. In this area there is still a tremendous
scope for improvements.
The quality of the roughages is mediocre as
they have low crude protein content and can be
considered as mainly energy and crude fibre
sources. Smallholder dairy farmers supplement
the roughages with cassava waste, tofu waste,
rice bran and other by-products. KUD produced
concentrates are used to give extra nutrients
for production and/or growth.
In general the basic rations do not provide
sufficient protein to support a good production.
If the farmers could obtain roughages with a
higher protein content it would significantly
enhance the milk production. During the dry
season there is an overall fodder shortage. The practice of grass conservation (drum silages or hay)
has been introduced on a very limited scale but needs further dissemination and support. If silage
feeding would be common practice, the milk production dip during the dry season would be
significantly reduced.
It is estimated that per year about 600,000 Mt of ruminant concentrates are produced in Indonesia17
.
There are a few KUDs that have a medium size feed mill (KPSBU, KPBS, etc.) producing 50 – 70
Mt/day (15,000 -20,000 Mt/year), but they still do not have the facilities to properly analyse the raw
materials and formulate the concentrates on basis of nutritional specifications. Also procurement of
raw materials at economies of scale is not possible. The concentrates available for the smallholder
16
IPB Faculty of Animal Sciences 17
Estimate from Nutreco Indonesia
Figure 5: roughage for stable feeding
Livestock identification mission
16
dairy farmers on Java vary tremendously in quality. Some KUDs produce concentrates with 14%
Crude Protein and 3,800 Kcal ME per kg while others barely are able to produce concentrates with
only 10.5% Crude Protein of which often 1% is urea protein (non protein nitrogen). Furthermore the
storage conditions at some KUD feed mills will increase the risks of mycotoxin development.
Unfortunately many smallholder dairy farmers do not have the possibility to buy concentrates from a
better supplier as they do not have the liquidity. By obtaining the concentrates from the KUD the
costs are deducted from the milk payment and the farmer does not need cash. Furthermore
concentrates are under the present circumstances often the only source of additional protein for the
cows and the farmers know from experience that they need it.
In general manure is not a problem. The manure produced at the smallholder dairy farmers is very
much valued. Farmers that have land available use it to enhance the production of fodder and
landless farmers sell the manure to the vegetable farmers. The larger smallholder farmers can utilize
the manure first to produce biogas as a contribution to the energy for the family and use the effluent
as natural fertilizer in the production of fodder crops. Hivos has been very active in promoting biogas
installations. The manure collection and storage is an issue that needs attention in the management
and the housing
The IPB Faculty of Animal Sciences has done work on Indigofera zollingeriana, an excellent protein
rich forage source18
. The Indigofera zollingeriana should be managed as a scrub that is regularly
trimmed to maximize the number of young branches and leaves developing. There are several
options for promoting the cultivation of leguminous plants with a high protein content in their leaves
and that are also draught tolerant (e.g. Leuceana leucocephala, Stylosanthes spc., etc.). A lot of work
has been done in Australia on Stylosanthes19
and ACIAR concluded that it is by far the most
economically significant pasture and forage legume available in the tropical regions. It is used in a
variety of feeding systems ranging from freshly cut fodder to dry leaf meal supplements.
The various support programmes have not placed much emphasis on improving the feeding and
reducing the feed costs through the introduction of leguminous plants and improving the quality of
the concentrates. By adding leguminous fodders to the rations the milk production will improve and
the concentrate costs will be reduced.
The knowledge of the farmers and the extension workers on cattle nutrition improvement is
minimal. By combining three activities - better roughage production, providing access to better
concentrates and capacity building on feed and nutrition – the milk production levels can improve
significantly and will be more sustainable.
3.5 Milk collection system
Smallholder dairy farmers bring the freshly milked (warm) milk twice a day to a Milk Collection Point
(MCP) where the milk is tested (alcohol test for stability and lacto density for possible dilution) and a
sample (can be) taken. The milk of several smallholder dairy farmers is mixed in either 40 litres
aluminium cans or in a small bulk truck and transported to a Cooling Unit with farm cooling tanks or a
Chilling Centre with quick cooling facilities through a Plate Heat Exchanger.
18
Use of Indigofera zollingeriana as forage protein source in dairy goat ration, IPB 19
Australian Centre for International Agricultural Research; various publications on selections of Stylosanthes
Livestock identification mission
17
After the milk has cooled down to about 3 - 4 degrees Celsius it is transported in bulk tankers (8,000
– 10,000 litres) to the dairy factories. The transportation time from a KUD to the industry varies from
a few hours up to as long as 15 hours. Upon arrival at the factories the milk is tested and if accepted,
delivered.
The handlings of the milk, the hygiene of the containers, tankers, etc. and the long transportation
chain demand very strict hygienic practices and a good organisation to get good quality raw milk with
12.0% Total Solids (TS) and <500,000 Total Plate Count (TPC) (expressed as colony forming units
(cfu)/ml) delivered to the dairy industry. The last 15 years significant improvements have already
been realised and the TS percentage has increased from 10.5% to 12.0% and the average TPC
decreased from 20 – 40 million cfu/ml to the current levels of 0.5 – 10 million cfu/ml. However, in
general the raw milk quality (in particular the hygienic quality) is still below the Standar Nasional
Indonesia (SNI)20
. Fresh milk with low TPC (<1 million cfu/ml) is combined with imported milk powder
to produce liquid milk and powdered milk. Fresh milk with a higher TPC is processed in (sterilized)
sweetened condensed milk.
The dairy industry pays each KUD directly or via
the Indonesian Association of Dairy Cooperatives
(GKSI). The Indonesian Association of Milk
Processors (IPS) has set milk quality standards but
each industry has made its own adjusted milk
payment scheme. All dairy factories pay
according to the composition and give a bonus
for hygienic quality and a penalty for dilution or
antibiotic presence. On average the milk price
received by the KUDs ranges from about IDR
3,400 – 4,300/kg. Each KUD has its own internal
payment system. The KUDs have a milk quality
control laboratory and pay for milk solids (fat and
Solids Non Fat (SNF)). The better KUDs pay a
bonus for hygienic quality (based on the resazurin
grade) and deduct a penalty for water dilution.
Each KUD is divided in “payment groups”
consisting of several farmers each. The farmers in
one payment group get the same milk price based
on mixed samples taken per payment period.
Payment periods vary from ten days to one
month. If the payment groups are very large, the
individual farmer cannot influence the payment
through better hygiene and good feeding. In
order to have the smallholder dairy farmers
become better aware of what the effects are when they improve the hygiene on the milk price they
receive, the payment groups should be as small as possible.
20
Faculty of Animal Sciences, Bogor Agricultural University (IPB)
Figure 6: farmer delivering milk to collection point
Figure 7: Milk collection point
Livestock identification mission
18
The KUD’s all have a handling charge between the price received from the dairy industry and what
they pay to the farmers. This handling charge varies from IDR 350 – 550/litre. As of April 2013 the
smallholder dairy farmers received a milk price in the order of IDR 3,100 – 3,800/litre.
Over the course of the last 15 years several KUDs have obtained better laboratory equipment
(Lactoscope, Lactostar, Somascope, Cryostar, etc.) and are now able to analyse a large number of
samples. These KUDs were able to increase the number of payment groups and make the milk
payment system more transparent.
However, the raw milk quality is still not good enough although significant improvements have been
realized. Still too many tanker loads are rejected because of poor quality. Major critical quality issues
remaining are:
1. TPC
2. Cold chain (in particular the time between milking and cooling)
3. Composition (TS%, fat% and SNF%)
4. Dilution with water
5. Antibiotic residues
6. Other additions to the milk (sodium bi-carbonate, sugar, etc.)
A serious food safety issue is the possible contamination with mycotoxins (aflatoxin, etc.) from poor
quality concentrates and feed supplements. According to the SNI there should be no more than 0.5
ppb in milk and 50 ppb in concentrates. The Consultants are not aware of a regular screening for
aflatoxin in milk. The climatic conditions in Indonesia are such (humid tropics) that without proper
storage facilities, feed raw materials can easily be contaminated with aflatoxin. Aflatoxin is a highly
carcinogenic natural toxin.
In the last 15 years several milk quality
improvement projects and programmes have
been implemented by Frisian Flag Indonesia
(FFI) with support of the Dutch Government
(PSIO Project in Lembang, FFI project in
Lembang, FFI project in Mojosongo, FFI
project in Pangalengan, etc.). In the course of
these 15 years the milk payment from the
industry to the cooperatives has become more
and more based on compositional as well as
bacteriological quality21
.
There are now dairy factories that pay for top
quality raw milk (<0.5 million TPC and >12.0% TS) a milk price delivered to the factory, of about IDR
4,500/kg. The maximum bonus for good hygienic quality can be as high as IDR 500/kg. All dairy
industries pay a bonus for milk with a higher Total Solids Percentage. If the cooperatives are
transparent and pass the bonuses and penalties for quality on to their farmers’ payment groups,
there is a clear financial incentive and farmers will be willing to make efforts.
21
Final Report, Improving Lembang Milk Collection Scheme, PSIO/RI/1/12 and Final Report FFI Project in
Lembang.
Figure 8: dairy farm near Lembang
Livestock identification mission
19
4. Development of a food security programme
4.1 Situation analysis
The analyses of the value chain arrangements and the different food security needs and
opportunities are summarised below. Given the fact that the stakeholders, trends and developments
in the two sub-sectors are completely different, the summaries are presented in two separate sub-
sections.
4.1.1 Poultry sector
Poultry products are, together with fish, the most important source of protein for consumers in
Indonesia. The expectation is that there will be a doubling in poultry meat consumption in the next
five years from the current level of 11 kg to 20 kg or more per capita per year. This will pose a serious
challenge to the Indonesian poultry industry, particularly in the light of the following factors:
1. The current supply of poultry meat to the markets in West Java are generally unhygienic and
do not meet food safety standards:
� High risk of introduction of zoonotic disease in the primary production due to poor
biosecurity and poor management
� Unhygienic slaughtering and processing for > 90 % of slaughtered carcasses.
� Logistics and trade, especially the absence of cold chains after slaughtering
2. Consumer awareness on safety and quality issues is low
� Price is the determining factor for the majority of consumers
� There are no incentives in the market or through regulatory framework to raise the
standards of production or to improve product safety and quality
3. Veterinary health risks undermine the growth and development of the poultry production
sector
� The current structure of the poultry sector facilitates the spread of disease; many contact
points, poor biosecurity and sanitation procedures and failing disease control programs
all contribute to high production losses in the primary production. Better health care and
greater attention also to animal welfare issues will be key to ensuring sound production
circumstances with a positive impact on productivity and farm income levels.
Food security related interventions in the poultry sector should thus cover all these issues. With an
increasing demand and consumption of poultry meat the private sector will make investments to
upgrade production capacity in primary production, processing, logistics and marketing. This provides
opportunities for improving the overall standard in production, quality and safety in order to meet
the existing quality and safety standards of the Indonesian Government.
The following principles should guide the food security program in the poultry sector:
� Access to safe and nutritious food is a human right. The background for this is that currently
it is regarded actable by many Indonesians that to provide food to the poorer part of the
population it is acceptable that much lower standards are used.
� It is the responsibility of the Government to oversee that the sector ensures food related
health risks are minimised. Currently poor implementation of existing regulation regarding
Livestock identification mission
20
food safety and poor law enforcement by the local and national government allows access to
the market of unhealthy and unsafe food.
� Food and nutrition security cannot be achieved without food safety. A focus on only volume
and nutritional value, without simultaneous attention to food safety, will lead to bigger
problems caused by larger volumes unhealthy and unsafe food in the market.
4.1.2 Dairy sector
Summarising it can be stated that the dairy processing companies are driving quality and food safety
improvements in the sector. Their price incentive system for better quality will ensure that dairy
cooperatives and their farmers will pay increasing attention to milk quality and food safety aspects.
Indirectly this will also have an impact on the scale of production: only more intensive production
systems with some economies of scale will continue to meet the increasing quality standards and
obtain the price premiums for quality.
Companies such as FFI invest in extension support on production issues and cooperative
strengthening. Furthermore they assist cooperatives with facilities and systems for quality control
and inspections. Co-funding from the PPP/FDOV- facility (in the range of Euro 4.0 million22
) has been
secured to implement a new FFI-led programme with various major cooperatives in West Java.
In terms of needs and opportunities the main complementary field that requires support is related to
the animal feed quality and supplies. In terms of production costs animal feed is by far the most
important factor and in terms of milk productivity the most limiting production factor in the current
dairy production systems. The two main areas of improvement identified are:
� The qualitative and quantitative roughage supplies will have to improve
� The price/quality ratio of the concentrated feeds will have to reduce.
Without feed improvements the competitiveness of the Indonesian dairy sector will further diminish.
Dairy processing companies will continue to use domestic milk supplies as a possible substitute for
imported milk powder and whilst the consumption levels in Indonesia will grow in the coming years
the relative share of domestic supplies will never exceed 30 – 40% of the total requirement. At the
same time farm gate prices for milk are relatively low when compared to beef prices. The best
strategy for sustainable development of the dairy industry in West Java is to improve overall
productivity through better quality roughage and access to better and more affordable concentrates.
In conjunction with the dairy processing companies drive towards scale and higher prices for quality,
feed related improvements can result in sustained supplies of domestic milk from smallholder dairy
farmers in West Java.
4.2 Objectives
The overarching goal of the Dutch – Indonesian cooperation in the field of food security and
agribusiness development in the livestock sector is to develop viable models for domestic
production and consumption of affordable, nutritious and safe animal-based products. Through
this cooperative programme a contribution will be made in relation to the following impact areas:
� Sustainability in production and domestic supplies of poultry meat and dairy products
22
Not yet finalised and formally endorsed by FDOV
Livestock identification mission
21
� Provision of sustainable income-generating opportunities for smallholder producers in poultry
and livestock sectors
� Improvement of the overall standards of animal health, welfare and food safety.
Within this overarching framework the proposed programme will have two components directed at
the two respective sub-sectors, each with its own set of specific results:
Expected results for the Poultry Sector
Programme Component
Expected results for the Dairy Sector Programme
Component
a. Enhanced consumer awareness on food
safety issues and poultry meat related health
hazards
b. HACCP standards adopted by poultry
slaughterhouses in Western Java
c. Higher income levels of broiler farmers
producing quality poultry meat
a. Consistent availability of roughages with a
higher nutritional value
b. Dairy farmers’ access to better quality
concentrates
c. Enhanced capacities of the KUDs and
regional extension staff on dairy cattle
nutrition, fodder production and fodder
conservation.
4.3 Areas of intervention
4.3.1 Poultry sector
To achieve the results the following main initiatives will be supported through the programme:
a. Enhanced consumer awareness on food safety issues and poultry related health hazards
Raising the awareness of urban consumers on food safety issues is required to create a
stronger market demand for safe poultry products. The retail sector, consumer organisations
and the Government (through MoA) should develop and implement a consumer awareness
campaign on food safety issues. Consumers should for example realise that the current meat
procured at the wet markets is unsafe and that frozen poultry products can be a healthier
option. This demand driven approach will in turn force the industry to change its practices and
facilitate the enforcement of the existing food safety standards and regulations throughout the
sector. At the same time the campaign will also aim to create greater transparency in the
supply chain on availability and price formation in the supply chain. This intervention will
include the mobilisation of Key Opinion Leaders to influence the perception of consumers on
poultry and poultry products. In addition mass media campaigns on food safety and poultry
related hazards will be developed and implemented to further increase the demand for safe
poultry meat in the market. Consumer studies on knowledge, attitude and practices (KAP) will
be used to monitor the effect of the consumer campaigns. Whilst the Indonesian partners are
clearly driving these activities, the programme can provide assistance and support in the field
of policy, planning and implementation.
b. Capacity building to support good slaughtering practices
Capacity building activities will focus on veterinary public health and slaughterhouse
inspections. Food safety agencies at province and district level and DGLAHS at ministerial level
Livestock identification mission
22
will be involved. This intervention aims at improving the food safety and hygiene standards in
the poultry slaughterhouses. Implementation of the highest level within the NKV accreditation
(see annex C) and subsequently HACCP are the envisaged targets. Slaughterhouses will receive
pre-inspection audits and advice on necessary improvements will be issued by the trained food
safety inspectors. Through the project capacity building support will be issued to food safety
inspectors in several main poultry production districts in West Java. Modifications in the
infrastructure and procedures are to be implemented by the slaughterhouses themselves in
accordance with the guidelines and advice issued.
c. Implement good farming practices in the poultry sector
Good farming practices will focus on implementing better management to increase
productivity and the establishment of effective biosecurity measures that reduce the risk of
disease. The main driver for farmers to participate and adopt the recommended practices will
be higher productivity and income. In collaboration with farmers and the IPB Faculty of Animal
Sciences standards and recommended practices will be developed that are fit for purpose for
the industry. Best practices from previous programmes on biosecurity improvement will be
adopted. Through trainer of trainer schemes integrator staff and extension services will
become involved in the development of the sector. Where necessary the quality of the input
materials (e.g. feed and water quality) will be improved. This will create commercial
opportunities for the poultry supply industry to get more involved. Through improved levels of
animal health, nutrition and growth, the overall animal welfare will enhance also. Improving
the animal welfare standards will be an integral aspect of the good farming practices.
4.3.2 Dairy sector
To achieve the results the following main initiatives will be supported through the programme:
a. Consistent availability of roughages with a higher nutritional value
Through applied research, field demonstrations and farmer extension activities in the main dairy
production regions better roughage production and conservation practices will be promoted.
This will include the introduction of leguminous plants in the monocultures of grass and the
cultivation of high protein scrubs that are also drought tolerant. Indigofera zollingeriana can
provide excellent quality, high protein roughage for direct feeding or if dried, grinded and
pelletized, provide a high crude protein supplementary feed. Next to Indigofera zollingeriana
there are other leguminous plants with the same possibilities. These interventions will lead to
better quality roughages and consequently more constant levels in milk production.
Conservation of fodder grasses and leguminous crops will be another area of attention. During
the dry season all dairy farms face roughage shortages while during the rainy season there are
periods of surpluses. There is no strong tradition of fodder conservation. The MoA and the IPB
have developed several promising pilot projects that promote drum silage making that can be
scaled up. This innovation is very suitable for the larger smallholder farmers and will improve
their sustainability and profitability. Silage making can be developed as a business case either by
the KUDs or private individuals.
Livestock identification mission
23
b. Dairy farmers’ access to better quality concentrates
Supply arrangements will be piloted between reputable feed companies, KUDs and dairy
processing companies for the supply of quality concentrates. The dairy farmers should get access
to differentiated and high quality feeds that are not contaminated with aflatoxin and other
mycotoxins. KUDs will become distribution agents for the feed industry and will face out the
unsustainable own concentrate production practices. This will reduce the contamination with
aflatoxin considerably and improve the production at the smallholder dairy farmers of these
KUDs.
c. Enhanced capacities of the KUDs and regional extension staff on dairy cattle nutrition, fodder
production and fodder conservation.
The knowledge of dairy cattle nutrition with the smallholder dairy farmers as well as the
extension workers of the KUDs will be further developed. Throughout the various projects and
donor activities little training in dairy cattle feeding has been given as emphasis has been placed
on hygienic milking and handling. With the new innovative activities (better roughages, fodder
conservation and better quality concentrates), a strong training component is proposed to
enhance the dissemination of the new techniques and knowledge. It is proposed to focus on
training the district and KUD extension workers. For this purpose a training-of-trainers
programme will be developed and implemented. The district livestock staff and KUD extension
workers will be responsible for the actual farmer training activities.
4.4 Programme scope and implementation approach
The Indonesian agricultural economy and livestock sector is vast and the scope of this programme
will have to be restricted in terms of geographical boundaries and range of interventions in order to
deliver tangible results and contributions to food security and agribusiness development. In relation
to the geographical focus the programme will be restricted to pilots and capacity building activities
on production and supply systems in West Java Province. The dairy and poultry sectors in this region
more or less exclusively produce for the urban markets in Jakarta and other regional cities (Bandung,
Bogor, etc.). This geographical focus will enable the programme to deliver tangible results in some of
the most intensified and fastest developing production and consumption chains in Indonesia.
In terms of implementation approach the programme will comprise a combination of applied
research activities, pilots, capacity building and policy advice. Through this programme the capacities
and conditions are to be created that will accelerate the sustainable development of dairy and
poultry production and consumption patterns. In this way a lasting impact of the programme can be
expected. The recommended implementation approach will have the following important
characteristics:
� Adopt an open and participatory manner of planning, management and evaluation in which the
interests and voice of consumers, producers, public sector and knowledge organisations are
adequately represented and incorporated.
� Mobilise the contributions from the different stakeholders in the two respective sub-sectors,
with private companies that bring in investments, entrepreneurship and procurement power;
governments that add legislation, laws, regulations and funds; and civil society that brings in
know-how, networks, local expertise and credibility.
Livestock identification mission
24
� Build on existing initiatives and developments in the poultry and dairy sectors thereby seeking
complementarity and introducing strategies for mainstreaming developments towards improved
production and consumption of affordable, nutritious and safe poultry and dairy products.
� Actively promote business-to-business cooperation within the regional supply chains and
between Indonesian and Dutch businesses leading to trade, joint business initiatives, foreign
investment and knowledge transfer; where necessary this may be supported with various
additional financing instruments for private sector development available from the Dutch
Government23
.
� Promote transparency and corporate social responsibility by ensuring that all participants in the
programme will underwrite the ILO declaration on fundamental principles and rights at work and
the OECD guidelines for multinational enterprises with regard to Corporate Social Responsibility.
The key elements of the recommended implementation approach are summarised in the diagram
below, whereby capacity building and institutional support will be an integral aspect of each of the
other three intervention areas.
23
See for example: http://www.agentschapnl.nl/en/programmas-regelingen/programmes
• support public-private cooperation and advice on public policies, service delivery, standards and enforcement issues
policy advice
• demonstrate advanced and practical solutions with substantive ambitions in relation to the issues and challenges identified in the two subsectors
pilots
• create platforms for more effective business cooperation between chain partners, including Indonesian - Dutch business cooperation
business-to-business
Ca
pa
city
Bu
ild
ing
an
d
Inst
itu
tio
na
l S
up
po
rt
Livestock identification mission
25
5. Programme management and implementation
5.1 Programme management issues
The responsibility for the overall programme management will be with a qualified organisation in the
Netherlands or Indonesia with adequate experience in financial control and management of EKN-
funded projects and programmes. The programme management organisation will be primarily
responsible for:
� planning, coordination and supervision of the various Indonesian and Dutch implementing
partners against the approved work plans and budget allocations
� reporting, communication and liaison with EKN, Directorate General for Livestock and Animal
Health Services and other important stakeholders in the dairy, respectively poultry sector
� the financial management and budget control at programme level.
EKN will appoint the programme manager. The qualified programme management organisation will
have to make a formal application in which amongst others the following is covered: (a) experience
of the organisation with management and implementation of donor-funded programme in
Indonesia; (b) qualifications and experience of the proposed key member(s) of staff responsible for
this assignment; (c) approach suggested towards coordination, supervision and implementation of
the different programme components; (d) proposed work plan and detailed cost estimates of the
proposed services.
The programme management organisation will propose an implementation team comprising
experienced specialists and advisors from within the organisation and/or sub-contracted experts in
order to cover all fields of expertise necessary for this programme. This will include amongst others:
� Dairy production, with an emphasis on animal feed and nutrition
� Broiler production, including disease control, feeding, animal welfare
� HACCP and GMP in poultry processing
� Business-to business cooperation and agribusiness development
� Awareness raising and consumer behaviour on nutrition and food security
� Participatory planning, capacity building and institutional development
The team of experts responsible for implementation will comprise both International and Indonesian
experts. The programme management organisation will have to ensure that a balanced team of
experts will be mobilised with adequate experience in Indonesia.
The programme manager will report to a Steering Committee comprising key public and private
sector representatives in the Indonesian livestock sector. The Steering Committee will comprise
three senior representatives from the DLAHS at the Ministry of Agriculture (DG Livestock and a senior
representative of livestock services of West Java Province and one its Districts) and three
representatives from the private sector (one form the dairy sector, one from poultry and one from
retail or consumer organisation). The Agricultural Counsellor of EKN will be part of the Steering
Committee. The Steering Committee will have an important role to advice on policy matters,
standards and regulatory frameworks, implementation issues and planning. The Committee may seek
advice and technical assistance through the programme, for example on matters related to enforcing
food safety standards, improving animal welfare, consumer awareness, etc.
Livestock identification mission
26
In addition to policy and planning matters the Steering Committee will also have the important
responsibility of approving the annual work programmes and cost estimates prepared by the
implementation partners under the supervision of the programme manager. In addition the Steering
Committee will check the half yearly and annual progress reports compiled by the programme
manager with contributions of the different implementation partners. These progress reports will
give data on the programme accounts, progress made against the work plan for the different
programme components and impact achieved against the different indicators selected for
monitoring and evaluation (to be defined). Where the progress and/or budget allocations deviate
from the approved annual work plans and cost estimates, the progress reports will also include
explanations on these differences and information on remedial actions.
EKN will have the final endorsing responsibility of all recommendations made by the Steering
Committee. In addition to the recommendations made by the Steering Committee, EKN will also use
the annual audit reports prepared by an accredited accountancy firm as a reference before endorsing
(or modifying or rejecting) any annual work plan and cost estimate, respectively progress reports.
The overall programme management structure will thus look as follows:
Business-to-Business
development
Programme Manager - (overall coordination & financial
management)
Steering Committee:
� 3 public sector members
� 3 private sector members
� EKN (non-voting)
Auditing firm
Embassy of the Kingdom
of the Netherlands (EKN)
Policy advice, planning
& (public) service
delivery
Pilot initiatives to test
and demonstrate
improvements and
solutions
Livestock identification mission
27
5.2 Implementation partners
As part of the implementation process a broad range of public and private sector partners will need
to be involved. The table below provides an overview of likely stakeholders to be involved; additional
implementation partners may be identified during the detailed programme planning and
implementation stages.
Poultry sector Dairy sector
Indonesian
Government
� DG Livestock and Animal Health
� Regional livestock services (West
Java Province and selected districts)
� Food safety agencies (West Java
Province and selected districts)
� DG Livestock and Animal Health
� Regional livestock services (West
Java Province and selected districts)
Industry
representatives
� Consumer organisations
� Organisations that represent the
poultry industry such as FMPI
(Indonesia Poultry forum), GAPPI
(Indonesia Poultry Association) and
GOPAN (Poultry farmers
Organisation)
� Retail organisations such as
APRINDO
� Private slaughterhouse
organisations
� Dairy cooperatives in West Java and
their umbrella organisation GKSI
Knowledge
institutes
� The IPB faculty of Veterinary
Medicine, department of Veterinary
Public Health for slaughterhouse
improvement
� The IPB faculty of Animal Science
for the improvement of good
farming practices in poultry
industry
� The IPB faculty of Human Ecology
on consumer awareness campaigns
and KAP studies
� Wageningen UR (Animal Sciences
Group & LEI Agricultural Economic
Institute)
� The IPB faculty of Animal Science
for the improvement of good
farming practices in dairy industry
� Wageningen UR (Animal Sciences
Group & LEI Agricultural Economic
Institute)
Private
companies
� HACCP specialists (e.g. Q-point)
� Feed companies
� Dutch Poultry Centre and/or
companies associated with this
Centre
� PT Frisian Flag Indonesia and other
dairy companies active in West Java
� Nutreco, De Heus, Provimi and /or
other feed companies
� Dutch Dairy Centre and/or
companies associated with this
Centre
Livestock identification mission
28
5.3 Liaison with other initiatives in the sector
In addition to the various public and private sector stakeholders listed in the paragraph above it is
essential that the programme is also well linked with other donor-supported initiatives and
developments in the sector.
During the programme scoping mission the team learnt that AusAID and NZAid are also in the
process of developing support initiatives in the Indonesian dairy sector. Through the Australian
Centre for International Agricultural Research (ACIAR) the Australian Government recently
implemented a large study titled: “Improving milk supply, competitiveness and livelihoods in
smallholder dairy chains in Indonesia” (November 2012). Early 2013 the Australian Government
implemented also a Dairy Scoping study. Through ACIAR a research and capacity building programme
will be implemented based on cooperation with research and training institutions in Indonesia and
Australia. In January 2013 the NZAid programme implemented an identification mission to Sumatra,
West Java and Central Java. NZAid will support the development of Sumatra as a new dairy
production area; details of this new programme are yet to be developed. It will be highly relevant to
liaise closely with the Australian and New Zealand initiatives to promote mutual learning and avoid
duplication.
Through the PPP/FDOV facility a new dairy sector project will be implemented by FFI (see also page
19) in cooperation with amongst others Agriterra and several main dairy cooperatives in West Java.
This project will address strengthening of the dairy cooperative organisations, dairy quality control
and supply, cool chain management, etc.
Relevant for the new Indonesian – Dutch programme in the livestock sector is also the on-going
research cooperation between IPB, Wageningen UR and University of Utrecht in the field of poultry
sector development and animal health. Several PhD studies will be supported through this
programme. This programme is funded by the KNAW (Royal Academy of Arts and Sciences) and is
part of SPIN (Scientific Program Indonesia Netherlands)
Lessons learnt from and work done by FAO, JICA, USAID, Wageningen UR and other organisations in
HPAI control and poultry sector development are also to be incorporated in the development and
implementation of the new livestock programme. This also includes activities and initiatives by
various civil society organisations such as Hivos (supporting small-scale biogas installations at dairy
farms) and AgriProFocus (planning to establish an Agri-Hub in Indonesia to be hosted by Hivos).
During 2013 USAID will phase out its involvement in the Indonesian agricultural sector, including its
support to HPAI control in the poultry sector. The new programme will only focus on the human
health aspects of HPAI
Liaison with poultry and dairy sector organisations in Indonesia and the Netherlands will focus on
information dissemination on developments and opportunities in the respective Indonesian livestock
sectors. Through business-to-business development initiatives (e.g. match making events, business
trips, etc.) investment and commercial cooperation in the dairy and poultry sectors will be actively
promoted.
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5.4 Work plan and cost estimate
The programme manager will have to prepare a detailed work plan and cost estimate as a basis for
contracting by EKN. The programme will start in 2013 (latest by 01 October 2013) and will run for 3 –
3½ years (until the end of 2016). As part of the work plan and cost estimate the programme
management organisation will also give an overview of the following:
� List of measurable deliverables for the different output areas
� Interrelationship and coherence during implementation between the work packages on policy
advice, practical pilot initiatives and business-to-business developments
� Preconditions and risks, including mitigating strategies to reduce the potential impact of the
identified risks
� Approach to (a) participatory planning, monitoring and evaluation and (b) capacity building and
institutional support
� Detailed work plan for the first year of programme implementation and a tentative work plan for
the subsequent years
� Experts and implementation partners to be involved in the programme
� Programme budget requirements, based on a detailed itemised cost estimate for the first year
and overall allocation for the various main intervention areas for the programme duration.
A very preliminary estimate of the project budget is included in the table below. During the project
planning period, this need to be further refined and justified.
Allocation Cost estimate
policy advice & service delivery € 800,000
pilots in poultry sub-sector € 2,000,000
pilots in dairy sub-sector € 750,000
B2B developments € 500,000
monitoring & evaluation € 200,000
programme management € 250,000
Total € 4,500,000
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Annex A: Terms of Reference
Terms of Reference Livestock Support Mission
Embassy of the Kingdom of the Netherlands Jakarta
Programming the sustainable animal production component of the EKN’s
Multi-annual Inter-ministerial Policy Framework
1. Introduction
The Dutch government wants to cooperate with the Government of Indonesia to strengthen food
security in Indonesia by improving the livestock production chain. The Embassy of the Kingdom of the
Netherlands (EKN) is organising a mission to provide guidance for the design of the future livestock
programme. The present ToR provides the background of livestock situation in Indonesia, the
relation with Dutch policy priorities, the mission objectives, the mission deliverables, time frame,
team composition and budget. To narrow the scope of this initiative, this mission will focus on two
important animal production chains: poultry and animal feed and fodder. In annex 1 a programme of
the mission is provided. Annex 2 gives the key documents that the mission will consult.
2. Background
One of the Government of Indonesia’s main stated priorities is to ensure food security for its
population. As in other countries, the factors affecting the food security situation in Indonesia are
multi-faceted. It has been recognised that significant gains in food security can be achieved by
improving agricultural output. According to the OECD, the Indonesian agricultural sector is seriously
underperforming relative to its potential in fostering poverty reduction.
Sustainable food supply chains are especially a challenge in areas with a high population density. For
that reason the mission will additionally focus on the island of Java, which has a high population
density. Because the population is still growing, food supply could become critical the coming
decades and in the urban agglomerations (Jakarta, Bandung and Surabaya and its surroundings) in
particular.
Poultry products are, together with fish, the most important source of animal protein in Indonesia.
Exact figures are not available but an estimated 2 billion birds annually are used for the production of
meat and eggs on a total population of 260 million people. Daily consumption of chicken in Jakarta is
approximate 800.000 and transport, slaughtering and marketing are associated with increasing
human health and environmental problems. Only 5 % of the poultry is slaughtered in specialised
slaughterhouses. It is expected that the demand for poultry will increase with growing economic
development in Indonesia. The current system is vulnerable to animal disease outbreaks, poses
human health risks and is not designed to cope with the predicted growth in demands.
A bottleneck for growth of animal production, according to consulted stakeholders, is the availability,
quality and price of animal feed/fodder. The poultry sector is highly dependent on imported
feedstuff. For dairy production the availability of fodder might be critical.
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Critical components for a food security program in relation to animal production are:
• innovation;
• sustainability;
• animal health and welfare;
• food safety;
• integral approach to the complete production chain (including marketing and sales);
• public-private cooperation;
• involvement of the Dutch private sector;
• Agro-logistics.
The mission will support the embassy in developing an animal production program that fits within
the MIB and has as a main goal to improve the food security situation in Indonesia. Animal welfare is
a critical component of the future programme in view of its political and public priority for The
Netherlands, but especially as the Indonesian Livestock Ministry has highlighted its importance. The
future programme has the ambition to address issues of quality and sustainability. The mission will
specifically focus on innovation and improvement of the poultry and animal feed and fodder
production chains.
3. Mission objectives
The mission will:
1. Assist the EKN in Jakarta to develop a coherent programme in food security and agribusiness
that leverages both development assistance and commercial opportunities, for the period
2013 - 2015. The mission will specifically focus on innovation and improvement of the
poultry and animal feed and fodder production chains.
2. Within the overarching goal of improving food security for the Indonesian population, the
intended programme should increase the socio-economic importance of the poultry and
animal feed sector for in particular small and medium scale producers, while at the same
time delivering improvement in the sustainability of production, processing, trade and
consumption in terms of environmental impact (in particular from feed production, manure
and (waste)water), animal welfare (improvement of housing, breeding and slaughtering), and
animal health (including avian influenza and reduction of antibiotics). As such, the program is
envisaged to set the scene for improving the feed and poultry sector in Indonesia as a whole.
3. Support the Embassy in defining clear development objectives for the livestock component
of the Indonesia food security programme.
4. Identify opportunities for Dutch private sector in agribusiness and agree on a common
approach to develop these.
4. Mission activities
The activities of the mission are:
• To map the needs in Indonesia with respect to the poultry and animal feed and fodder
production chains from a food security perspective;
• To define potential target groups including potential co-investors and relevant development
objectives in poultry and animal feed and fodder production;
• To identify added value from a Dutch policy and expertise perspective to meet these needs;
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• To identify possible synergies with on-going and planned activities by GoI, other donors, and
Dutch stakeholders, as well as with private investments;
• To identify and map private, public, and civil society stakeholders and potential Dutch and
Indonesian partner organisations for these sectors;
• To develop programme frameworks for each of these sectors, including intervention logic,
timeframes and funding (result chains) which contain the critical components mentioned
earlier.
5. Deliverables
The mission will deliver one report with proposals for the embassy for interventions in the poultry
value chain and animal feed and fodder production to improve the food security in Indonesia, within
the framework of the MIB. The report will include needs assessments, stakeholder consultation,
development objectives, plus (to the extent possible) timelines, potential partners and required
funding. The proposals will strengthen the support to the Dutch private sector in Indonesia in line
with the objectives of the top sectors approach of the Ministry of Economic Affairs.
6. Timeframe
• A pre-mission briefing will be held in The Hague with DDE (Wijnand van Ijssel) and DG AGRO
(Marcel Vernooij and Will Huisman) after selection of the team members, where all mission
participants will share their experience in the relevant sectors in Indonesia, their views on
opportunities for future programmes, and where a plan for the mission will be further
established.
• The 10 day mission to Indonesia will take place on 9 -19 April , 2013
• Briefing with EKN at beginning and end of mission.
• The draft report will be submitted before 30 April, 2013, and finalised by 20 May, 2013.
7. Mission team composition
The team will consist of four experts from private sector, knowledge institutes and will include
expertise on poultry production, animal feed/fodder production, animal health and food safety, and
poultry value chain development, with at least 2 people having significant experience in the Asian
region. The following members will be selected:
- Team leader. A Dutch expert with broad experience in all relevant fields of the mission,
experience in Indonesia and elsewhere in Asia, knowledgeable on Dutch policy in relation to
food security and especially the livestock products and value chains, capable of delivering a
report, good communicative skills and able to guide a mission team.
- International expert in poultry production and management with a strong background in the
private sector
- International expert in Animal Health, Food safety, Livestock and Nutrition Expert
- National or Asian expert in poultry value chain or food safety, good linkage to DG Livestock
It is anticipated that the mission will be accompanied by representatives of the Dutch embassies at
various stages of the mission programme to bring in the perspective of the Dutch Government. In
addition the Dutch mission members will meet representatives from DG Agro (Vernooij, Huisman)
and DGIS/DDE before departing to Indonesia.
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Annex B: Food security mission program 09-19 April 2013
PARTICIPANTS FROM NL:
Identification Mission team: 1. Frank Joosten, Advance Consulting 2. Ivo Claasen, WUR
3. Gerhard Veldink, HVA International
4. Prof. Ahmad Sulaeman, IPB GOVT 5. Jean Rummenie, Embassy 6. Hajo Provó Kluit, Embassy 7. Aditya Kusuma, Embassy PRIVATE SECTOR(Sector knowledge Source) 8. Jan Wagenaar - Frisian Flag Indonesia 9. Haiko Zuidhoff – Nutreco 10. Willie Blokvoort - ISA Hendrix MOBILE Jean: +62 811 886011 Hajo: +62 811 886035 Aditya: +62 811 933434
HOST AND PARTNERS IN INDONESIA:
GOVT 1. Mr. Syukur Iwantoro – DG Livestock 2. Mr. Akhmad Junaidi – Director Kesmavet 3. Mr. Pudjiatmoko – Director Animal Health 4. Mrs. Sri Mukartini – Dep. Director Kesmavet 5. Mrs. Titiek Eko – Dep. Director Animal Production 6. Mrs. Sri Basuki – Dep. Director Animal Feed Production CIVIL SOCIETY/UNIV 7. KPBS and KPSBU (Dairy Cooperatives Pangalengan and Lembang) 8. FMPI (Federasi Masy Perunggasan Indonesia – Ind Poultry Society) and its member assocs (ARPHUIN – Poultry Slaughterhouses Assoc,) 9. Retail Association Indonesia PRIVATE SECTOR (Sector knowledge Source) 10. Charoen Phokpand (Eddie Huitink) 10. Japfa 11. Carefour 12. Hypermart
Date Time Program Program Content Logistic/To Do PIC
(Person in
Charge)
Tuesday 9 April
Arrival FJ, IC and GV Hotel Gran Melia: Marlene FJ, IC and GV
(reserved)
Wednesday 10 April
09.15 – 10.30 10.30 – 12.00
Briefing at the Embassy Internal meeting of the
GM, HPK, and AK
Transport: 1. CD 60 10
Jean’s car
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13.30 – 14.30 15.00 – 16.00 16.30
Mission team Orientation meeting with other Donors: USAID New Zealand Aid Back to Hotel
Poultry/Animal Health program Dairy program
2. CD 60 54 (Tumiyo)
Address: Sarana Jaya Building, Jl. Budi Kemuliaan I No. 1. Address: Sentral Senayan 2, 10th floor Jl Asia Afrika No.8., Gelora Bung Karno
Aditya
Thursday 11 April
09.00 – 10.00 10.00 – 12.00 12.00 – 13. 00 13.00 – 15.00 15.00 – 16.00
Meeting w/ DG Livestock and MoA staffs dedicated for the Food Security program Meeting with Donor representatives attached at MoA (FAO, DAF/Australia, JICA) Lunch Roundtable Discussion with FMPI (Indonesia Poultry Association) and its member (PINSAR, GMPTI, ARPHUIN etc) Meeting with Retail Association Indonesia (retail chains using poultry and other livestock products)
Discussion on policies and directions Cont. orientation program Discussion with various number of industry and farmer organization in poultry and dairy sector Discussion with: -Hypermart -Carrefour
At MoA At MoA. Individual meetintg Lunch facilitated by DG Livestock Venue is at the MoA. Invitation sent by DG Livestock Invitation sent by DG Livestock Transport:
1. CD 60 10
Ibu Tini / DGAHLS
Friday 12 April
08.00
Depart from Gran Melia
Transport:
1. CD 60 10
Ibu Tini / DGAHLS
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10.00 – 13.00 14.00 – 16.00 17.00
Visit Japfa poultry abattoir in Ciomas, Bogor Visit Bogor Dairy Cooperatives (KPS) Visit to Bogor Wet Market (next to Bogor Palace)
Discussion on cattle feed production of KPS Seeing the poultry products market in Pasar traditional
Jean’s car 2. CD 60 54
(Tumiyo)
Saturday 13 April
OFF
OFF
OFF OFF OFF
Sunday 14 April
07.00 10.00 -12.00 12.00 – 13.00 13.00 – 14.30 15.00 – 17.00 19.30
Depart to Bdg Program Dairy and Cattle Feed Meeting with FFI and KPBS Pangalengan LUNCH Continued program. Visit demo farmers, milk Collection points, Cooperative’s feed plant and farmer’s silage Arrival Novotel Bandung
Discussion with current program in dairy development of KPBS and GKSI. Lesson learned from previous projects with FFI and NL. Inputs and participation from KPBS in the MIB’s food security project Learning the dairy development project of Ultra Jaya
Meeting appointment Reservation Novotel Bandung (1 night): FJ, IC, GV, AS. EKN: JR, HPK and AK Lunch by FFI Transport: 1 minivan 10 seats
-Frisian Flag Indonesia (FFI) arranges the visit program (Ibu Yani) -Marlene
.
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Monday 15 April
07.00 07.30 08.30 – 10.30 10.30 – 13.00 13.00 – 14.00 14.00 15.00 – 16.00 16.00 19.00
Check out & Bfast Depart from Novotel Bandung to Lembang Program Dairy and Cattle Feed at KPSBU Visit to Balai Benih (Cattle’ Seed Production Centre) and demo farmer Lunch Depart to Subang Program at Farmer group’s Feed plant Back to Jakarta Arrival Hotel Gran Melia
Discussion program dairy village FFI and previous projects. Inputs and participation from FFI in the MIB’s food security project. Discussion with current program in dairy development of KPSBU and GKSI. Lesson learned from previous projects with FFI and NL. Inputs and participation from KPBS in the MIB’s food security project
Lunch by FFI? Visit program
FFI arrange the meeting program DGAHLS arrange the program visit
Tuesday 16 April
09.00 – 10.00 12.00 – 13.00 14.00 – 16.00 17. 00
Visit Retail chains: Carrefour Hypermart etc Roundtable Food Security with Living Lab Logistic Indonesia (Frits Blessing) Meeting Willie Blokvoort
Aditya/Mission Team/DGAHLS
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Wednesday 17 April
Morning Late afternoon back to Jakarta
Meeting in Bogor -IPB animal production experts (dairy and poultry) - Feed Expert team (Komisi Pakan) -Animal Health Lab? Tbc.
Transport: CD 60 53 (Parimin)
I bu Tini dan Pak Ahmad Sulaeman
Thursday 18 April
Morning 18. 00 – 22.00
Cont. Meeting private sectors: Haiko Zuidhoff - Nutreco Poultry integrated Retail chains Dinner and Wrap Up Meeting
Meeting schedule will be depending on the result ON THURSDAY 11 APRIL Presentation of findings and recommendation to DG Livestock
Transport: CD 60 53 (Parimin)
Aditya/Mission Team/DGAHLS
Friday 19 April
10.30 – 11.30 12.30 – 13.30 15.00
Wrap up meeting with Embassy Lunch The Mission to the Airport
Presentation of findings and recommendation to GM, Head of departments (LR, HEA) and senior officials
Ibu Tini / DGAHLS Aditya
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Annex C : Explanation on NKV food safety standards for meat sector
NKV CERTIFICATION ONNKV CERTIFICATION ONNKV CERTIFICATION ONNKV CERTIFICATION ON ANIMALANIMALANIMALANIMAL----DERIVED FOOD BUSINESSDERIVED FOOD BUSINESSDERIVED FOOD BUSINESSDERIVED FOOD BUSINESS
Legal aspect:Legal aspect:Legal aspect:Legal aspect:
1. Food Act No 7/1996 which has been revised with Food Act No 18/2012
2. Law No. 18/2009 concering Livestock and Animal Health
3. Government Regulation No 28/2004 concerning Food Safety, Quality and Nutrition
4. Government Regulation No. 22/2003 concerning Veterinar y Public Health. Kesmavet
5. Minister of Agriculture Regulation No 381/2005 concerning Guideline for NKV Certification of Animal-Derived Food Business Unit
Government regulation no 28/2004 declare that all food business operator should fullfill the sanitation requirement and implement good practices in their activities. To assure that animal-derived food business operators apply the good practices, Ministry of Agriculture issued a Minister Decree No 381/2005 which stated that all animal-derived food busines operators should hold a Veterinary Control Number (Nomor Kontrol Veteriner/NKV).
Law No. 18/2009 article 58 point (1): In order to assure animal product that are safe, healthy, whole, and halal, (ASUH) the government and regional government with its authority conduct controlling, inspection/examination, testing, standardizing, certification and registration of animal product. Article 58 point (2): Controlling and inspection of animal product are carried out at the following stage, production site, slaughtering, collecting, in fresh condition, before preservation and on the distribution after preservation.
Getting NKV certificate is one step in assuring food safety of animal-derived food products as can be seen below:
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HACCP
System
Fulfill hygiene-sanitation requirement
Implementation of Good Farming
Practices and SOP
Implementation of Hygiene Practices clean water facilities , process separation of clean and dirty area
avoiding direct contact with floor
Food Safety Assurance on Animal-Derived Food Business Unit
HACCP Certification
NKV Certification
Supervision of
Hygienic Pract
NKV certificate is used to control the implementation of food safety measures in the food business as showed by the following figure:
Pemasaran KonsumenFarm RPH/RPU Pemrosesan Distribusi
Edukasi dan Edukasi dan Edukasi dan Edukasi dan
advokasiadvokasiadvokasiadvokasiRPH, Usaha Pemasukan/Pengeluaran/ Pengumpulan/Distribusi, Usaha
Pengolahan, dan Usaha Penjajaan/Ritel PAH
Policy for Controling Animal-Derived Food Business Unit
Domestic Business
Sertifikasi
AnimalAnimalAnimalAnimal----Derived Food Business OperatorDerived Food Business OperatorDerived Food Business OperatorDerived Food Business Operator The Animal-derived food business operators include: a. Animal slaughtering house (RPH) , Poultry Slaughtering House (RPU), Swine
Slaughtering House b. Layer poultry Farm Business c. Importing and Exporting
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d. Distribution Unit; e. Retail f. Animal-derived Food Processing Unit Business operators in distribution and or animal-derived food retailer include a. Operators who manage cold storage and meat shop ; b. Operators who manage milk cooling centre and milk cold storage; c. Operator who package and label egg According to the MoA Decree, each animal-derived food business unit is obliged to have NKV. Requirements to get NKVRequirements to get NKVRequirements to get NKVRequirements to get NKV To obtain NKV, the business unit should meet the hygiene-sanitation requirements. NKV will be awarded to the business operator who is responsible for the whole business management, including infrastructure, facilities, personal, and production and handling practices. If there is addition new infrastructure for same business which is located in yje same location, there will be given a new revised NKV. For new additional facilities for similar business but in t hedifferent location, it should have a new NKV. The requirements to obtain NKV (Chapter III article 6 of MoA Decree No 381/2005): (1) The operators shall fullfill administration and technical requirements. (2) Administration requirements include: a. Hold ID Card/Establishment Act; b. Hold letter informing domicily c. Hold Letter for Trade Business Permit or Surat Izin Usaha Perdagangan (SIUP); d. Hold Nomor Pokok Wajib Pajak (NPWP); e. Hold Surat Izin HO (Hinder Ordonnantie) (3) Technical requirements include: a. For RPH, RPU, and Animal-Derived Food Processing Unit should hold
Environmental Management Effort (UKL)/Environtmental Control Effort documents;
b. Has building/premises and infrastructure for the business units that fullfill the technical hygiene-sanitation requirements
c. Has technical workers and or memiliki tenaga kerja teknis dan atau technical coordinator who hold expertise/skill in veterinary public health
d. Applying hygienic handling and or processing process (Good Hygienic Practices); e. Applying Good Farming Practices for Layer Hen. Beside the above mentioned requirements, for RPH, RPU and swine slaughtering house, who operate business in exporting (delivering) meat and its processed item are obliged to fulfill the technical requirements of SNI RPH (SNI 01-6159-1999) and SNI RPU (SNI 01-6160-1999). Procedure To Obtain NKVProcedure To Obtain NKVProcedure To Obtain NKVProcedure To Obtain NKV An operator of animal-derived food product business after trying to implement the hygienic and sanitation practices on their business, he/she can apply to get NKV certficate by sending the application to the Head of Provincial Office of Livestock with carbon copy to the DG Livestock and Animal Health along with the administration and technical requirement documents. After receiving the
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application, the office will examine the requirements. If the requirements are not completed yet, the applicant will be asked to complete it first. If the requirements have been completely fulfilled, there will be assessment and inspection on the busines operation unit conducted by NKV auditor led by a DVM. The auditor will assess the hygiene and sanitarian requirements on the site and will report it to the office. Based on the recommendation of the auditors, the office will issued the NKV certificate for the busines unit. Duration of the CertificateDuration of the CertificateDuration of the CertificateDuration of the Certificate Each operator who has got NKV is obliged to put the number of the NKV on the packaging of the product. The certificate will work for period of the business unit operate its business. The certificate will work for period of the business unit operate its business. However , the NKV can be pull off in the condition: a. with the request of the applicant
b. not meet the requirements anymore
c. found any violance in the implementation of production, handling and processing processess.
d. the business unit does not operate for consecutive six months.
e. the business unit bancrupt/pailit;
f. tbe location of business unit move to difference province
g. recommendation of DG livestock and Animal Health based on verification and surveilance results