Australia’s dairy industry set to benefit from new Indonesian school milk program rolling out this year

Indonesian children will be encouraged to drink a cup of milk per day through a new school program that could reap big rewards for Australia’s $6.1 billion dairy industry. The program is part of the recently elected Indonesian Government’s Nutritious Meals Program, and aims to combat malnutrition and promote healthy eating — targeting 60 million schoolchildren across the country. It is expected the program will more than double the country’s overall dairy consumption by 2029. RaboResearch estimates the total milk required at full implementation could surpass two billion litres, based on an anticipated 83 million recipients. Indonesia’s dairy consumption in 2024 was estimated at 1.1 billion litres, including both flavoured and white milk. According to a recent Rabobank report, the program would create opportunities for Australia and other global dairy players. The estimate accounts for school absenteeism, lactose intolerance and an average serving size between 125ml and 200ml. Report author, RaboResearch senior analyst Michael Harvey, said the majority of milk consumed in Indonesia in 2024 was imported. He said domestic production was estimated at 900 million litres, while an additional 2.5 billion litres (liquid milk equivalent) was imported. The Indonesian Government and dairy industry intend to significantly increase the national dairy herd to meet the demand of the program. It is understood 50 dairy heifers have already been flown to Indonesia from Sydney specifically for the program. Mr Harvey said Indonesia would need to scale up both live cattle supply and the local dairy supply chain to achieve its “ambitious” milk supply growth rate targets and dairy cattle numbers. “This will include need for feed genetics, farm infrastructure and farm management skills to support the expanding local industry,” he said. “And overall, we expect global input players and dairy companies to benefit.” Mr Harvey said the country would also require a fourfold increase in the domestic dairy herd. That’s one million dairy cattle from various countries over the next five years. Indonesia was Australia’s fourth-largest dairy export market in 2023/24, after China and Japan, taking more than 60,000 tonnes of Australian product. Australia has also been a longstanding exporter of dairy cattle to Indonesia, exporting 7500 dairy cows between 2019 and 2023. For now, Mr Harvey said Indonesia was expected to remain a net importer of dairy and anticipates annual important volumes to grow. “Clearly Indonesia is an important trading partner for Australian dairy and will continue to present growth opportunities moving forward,” he said.