There's plenty of money in milk, bounty in blooms

Duncan Graham, The Jakarta Post, Surabaya

Local and overseas investors should add rural interests to their portfolios to slow the urban drift, boost the economy of country towns and help educate and employ local people.

Plus get a decent return, and enjoy a better lifestyle, according to Mohammed Koesnan, head of one of Indonesia's most successful cooperatives.

"Too much money is going into city developments," he said. "Many have a blinkered view of rural Indonesia. They're overlooking the opportunities to be found in the hinterland.

"Farm produce is part of the chain of life. Quality food helps build our children's health and intellects so they can better cope with the future. That will benefit us all. I don't think money should be the number one motive."

For a man who has not been driven by profit, Koesnan has done better than most who have made amassing cash their goal.

In 2005 he was given a presidential medal for his pioneering skills in making an East Java cooperative one of the most progressive in the republic.

Last year his work was recognized by the Indonesian Livestock Industry with a national award.

Appropriate, for in the past decade he has imported 5,000 dairy cattle from Western Australia (WA) and Victoria. The ambition has been to lift milk production and quality throughout Java, but particularly around Nongkojajar in East Java.

This is a village on the western slopes of Mount Bromo, 2,000 metres above sea level and about 80 kilometers southeast of Surabaya. It has long been a major dairy center and its dominant building is the milk factory. But, till recently, animal husbandry and processing systems have been primitive.

Now the Setia Kawan (loyal friend) Cooperative has an Ultra-High Treatment (UHT) plant producing packaged milk for the local market and export to South East Asian countries. It runs 24 hours a day and takes milk from five other cooperatives.

The co-op has also built a model dairy using modern milking machines and an udder-to-vat piping system to avoid contamination. The idea is to encourage farmers to upgrade. Workshops on cattle feeding and hygiene are held most weekends.

The big changes started in 1992 when Koesnan was part of an Indonesian farmers' group that visited WA.

On dairy properties, he was astonished to learn that big-bodied Friesians were producing up to 40 liters of milk a day -- more than four times the yield of Indonesian cows.

He bought a few pregnant Aussie heifers, but at first they did not adjust well to the Indonesian way of doing things. With land scarce, cows in Nongkojajar are stabled and grass brought to them. The newcomers were used to broadacre grazing and ample exercise at lower altitudes.

An Australian vet was brought in; he advised supplementary dry foods. So a factory has been built to supply this need using waste products from wheat milling. The cattle are now thriving and producing around 30 liters a day.

Koesnan was also surprised on his WA visit to meet potato growers who budgeted for yields of up to 70 tonnes per hectare, compared with an East Java average of 15 tons.

In 2000, he imported one container of Australian seed potatoes. Three years later he was bringing in ten containers, and although numbers have dropped as farmers have nurtured their own seeds, he is still buying from WA.

Together with local farmers, he has 300 hectares under cultivation, with the potatoes mainly sold to factories producing chips and crisps.

"We have limited space in the mountains so it's important that we learn how to produce more using the resources that are available," he said.

"The co-op has 12,000 dairy cattle. This year, I hope we'll be able to increase numbers by 850. This area has the capacity to run 15,000 cows. We need a lot more milk."

Despite his honors, Koesnan prefers to keep his head below the skyline, which is difficult when he is such a standout corporate success.

He does not speak English, so has relied on his instincts to judge character when dealing with Australians. He likes to do business direct, farmer-to-farmer, stay on properties and meet families. Despite the vast cultural difference, he says he's found few problems.

He has sent his sons to study agriculture in New Zealand so they will be aware of modern trends and be fluent in the international language.

His office is modest and has none of the show-off trappings normally associated with big business. He is particularly keen to get mid-level investors into agriculture and claims opportunities lie in supplying local markets.

Fresh and UHT milk consumption in Indonesia is increasing by one or two per cent every year. Although this sounds small, the quantities are huge when measured against the population.

Before the UHT plant was built, the Setia Kawan Co-op sold milk to other companies for powdered milk manufacture. Indonesians have long favored this product for kitchen use and baby formula, while in most other countries fresh milk is preferred.

The lack of refrigerated transport and domestic fridges has been a principal factor. Now more households are getting used to the benefits of liquid milk.

"Future prospects look good," said Koesnan. "This year, I'll bring in apple trees from WA to improve local stocks and grow different varieties better suited to changing tastes. I'm also importing tropical vegetable seeds, including capsicums.

"There's a strong demand for cut flowers and plants, with the market seeking new blooms. We're now looking at varieties from South Africa and New Zealand, which have a much longer shelf life.