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Livestock identification mission

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2013

Final report

Identification Mission

5/20/2013

Identification Mission on the Livestock

Component of the Dutch-Indonesian

Programme on Food Security


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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.


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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

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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


13

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


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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


15

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


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


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


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


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


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


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


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.


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.


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


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.


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


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


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;


32

• 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:


39

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


40

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


41

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

identification mission on the livestock component of the ... · identification mission on the...

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