School Milk Program to Boost Dairy Demand in Indonesia

Progressus
Jun 21
2 min read

Updated: Jun 30

By Progressus

School children drink dairy milk, boosting Dairy Demand in Indonesia

Indonesia's new school milk program could nourish minds and global dairy markets, according to a Rabobank report.

The recently elected Indonesian government has introduced a range of policy measures with the potential to transform the country's dairy supply chain.

“The centrepiece of its policy is the Nutritious Meals Program, which aims to combat malnutrition and promote healthy eating among school children,” report author RaboResearch Senior Analyst Michael Harvey said.

A key feature of this program is to provide food, including milk, to 60 million students on every school day by 2029.

RaboResearch estimates the total milk required at full implementation could surpass 2 billion liters. This estimate is based on an anticipated 83 million recipients accounting for school absenteeism, lactose intolerance, and an average serving size between 125ml and 200ml.

The report said the ambitions behind Indonesia's school milk program have the potential to significantly increase Indonesian demand for liquid milk.

“The majority of milk consumed by Indonesia's 280 million people in 2024 was imported, with domestic production estimated at 900 million liters, and an additional 2.5 billion liters (liquid milk equivalent) imported,” Mr Harvey said.

“To meet the growth in demand that will result from the program, the government and industry plan to significantly increase the national dairy herd.”

As the rollout of the program gathers pace, the report said, investment across Indonesia's dairy sector is expected to accelerate, with more pronounced impacts on the global sector.

“For Indonesia to achieve its ambitious milk supply growth targets and accommodate the considerable number of dairy cattle needed, it will need to scale up both live cattle supply and the local dairy supply chain,” Mr Harvey said.

“This will include need for feed, genetics, farm infrastructure, and farm management skills to support the expanding local industry. And overall, we expect global input players and dairy companies to benefit.”

While the school milk program is likely to increase domestic supply and provide a tailwind for local Indonesian dairy players, Mr. Harvey said, Indonesian dairy import demand is also expected to rise.

“Fundamentally, RaboResearch expects Indonesia to remain a net importer of dairy and anticipates that annual import volumes are likely to grow over the medium term,” he said.

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