Milk is an essential commodity because the Government of Indonesia aimed to increase domestic milk production up to 50% by 2020. At the present, domestic milk production in Indonesia is only able to fulfill 20% of national milk demand. East Java and West Java Provinces are the main producers of milk in Indonesia. The objective of this study was to compare dairy farming management and business model between East Java and West Java, Indonesia. This study employed descriptive statistical and quantitative analyses. The dairy farming management questionnaire survey was conducted in May-July 2016 and the dairy business model survey was conducted in October-November 2018. There were no significant differences in dairy farming activities between farmers in Lembang and Malang whereas the average number of lactating cows is 5 and 3 heads, respectively. Farmers received farm gate price of Rp4,622 per liter in Lembang and Rp4,535 per liter in Malang. Based on net return over cash variable cost, farmers in Malang and Lembang earned around 20 percent from the milk price. There were six inclusive business models (IBMs) identified between smallholder farmers, cooperatives, and private companies with different characteristics have been implemented in East Java and West Java. It is suggested that cooperative improves its role in the integrated agribusiness system in order to improve the bargaining position of dairy farmers as well as in terms of cost-efficiency. The strategies and policies should be implemented to support development of sustainable, profitable and smallholder-inclusive dairy supply chains in East Java and West Java.
Keywords: inclusive business model, integrated agribusiness system, dairy farming, milk production, net return
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).