Innovation

During the policy trade system of national milk in the era of President Suharto, which requires farmers to form Koperasi and join the Gabungan Koperasi Susu Indonesia (GKSI) in order to market fresh milk in large companies, Koperasi 'Jaya Abadi' was started in in 1995 with Triwiyono as chairman accompanied by his brothers Amor Kodrat, Handoko, and Panggih Suparmadi.

At that time, it is very difficult to supply fresh milk to Nestle (New Order era). Nestle controlled fresh milk in West Java, including the price of it. In 1996, Koperasi Susu “Jaya Abadi” could supply 5 tons of fresh milk to Nestle. Fresh milk has grades, which depend on the number of bacteria. If the fresh milk is under grade, Nestle will color the fresh milk so that Koperasi cannot sell it to another party.

Koperasi Susu “Jaya Abadi” believed this treatment was unfair and wanted Nestle to stop this so that they could still sell their under grade fresh milk to another company. Nestle agreed to stop doing this.

In 1999, there was a fresh milk crisis. Indomurni (Indofood Group) needed 6 tons of fresh milk because supply from Koperasi Unit Desa had stopped. At that time, Koperasi Susu “Jaya Abadi” supplied 20 tons of fresh milk just to Nestle. But, because of the fresh milk crisis, Koperasi Susu “Jaya Abadi” instead supplied 14 tons to Nestle and 6 tons to Indomurni in order to reduce dependency on Nestle.

Nestle responded by taking a cooling unit from Koperasi Susu “Jaya Abadi”. The cooling unit is very vital to fresh milk. Without the cooling unit, Koperasi Susu “Jaya Abadi” cannot make progress. Koperasi Susu “Jaya Abadi” tried to import a cooling unit from Belgium but Belgium refuse to sell cooling unit to Jaya Abadi because they were tied with Nestle.

In 1999, Government issued UU No. 5 Tahun 1999 tentang Larangan Praktek Monopoli and Persaingan Usaha Tidak Sehat. Koperasi Susu “Jaya Abadi” sent Law No. 5 1999 to Belgium. “After one month, they replied to our email and agreed to supply a cooling unit. This email from Koperasi Susu “Jaya Abadi” become a discussion topic in Nestle Global.”, said Amor Kodrat. But, the cooling unit problem was solved.

Fresh milk production from Koperasi Susu "Jaya Abadi" increased. This created another problem because Nestle didn’t want to receive more fresh milk. At first, Koperasi Susu “Jaya Abadi” wanted to supply to Frisian Flag. Frisian Flag also own by Koperasi in Holland, so they have same vision to build Koperasi. The problem was distance, so Frisian Flag could not receive the fresh milk from Koperasi Susu “Jaya Abadi”.

Because production at that time already achieved 30 tons, Koperasi Susu “Jaya Abadi” sent 10 tons to Indomilk in Jalan Raya Bogor via Indomurni.

“I have senior in ITB who work in Ultra Jaya. I contact him and Ultra Jaya responded well.”, said Amor Kodrat. A week later, they ask Koperasi Susu “Jaya Abadi” to sent 12 tons of fresh milk. “We afraid fresh milk will be broken because it takes time 18-20 hours.”, said Amor Kodrat. To prevent this, Koperasi Susu “Jaya Abadi” use double hull to reduce heat transfer and also reduce first temperature to 0 to 1o C.

The price of fresh milk depend on Total Solid (TS) and Total Plate Count (TPC). Total Solid depends on Animal Feed. Total Plate Count (TPC) depends on post-harvest processing. Koperasi Susu “Jaya Abadi” help dairy farmer to reach TS and TPC standard. Koperasi provides animal feed to dairy farmer. “We provide pakan konsentrat above SNI with expectation TS will be higher.”, said Handoko. With regard with TPC, Koperasi provide more cooling units.

Inspiration

After the graduation process as a veterinarian at the University of Airlangga, Surabaya in 1986, Tri bought a skinny cow at an auction with loan, instead of finding a position as an office employee.

In the interview, Pak Handoko said “In 1987 only 1 people have cow, but in 1994 there are 38 people have cow in Desa Bendosari. At first, we sold fresh milk directly to the customer, but when the fresh milk production achieved 2 tons, we had difficulties to sell at that amount. Jaya Abadi applied for a “koperasi” permit in 1995. In 1996, we got the permit. Also in that year, we can supply fresh milk to Nestle.”

An average of 100 tons of liters of fresh milk every day is distributed by Koperasi Susu 'Jaya Abadi' to the national milk producer. The milk supply, not only come from dairy farms owned by Triwiyono and his brothers, but also obtained from the dairy farmers who sold fresh milk Koperasi ‘Jaya Abadi’ to cooling centers in several places in East Java, such as Ponorogo, Trenggalek, Tulungagung, Blitar and Malang. Tri and his brothers use modern business management to run the Koperasi Susu “Jaya Abadi” instead of the old style which depends on Undang Undang Koperasi of 1992.

Koperasi Susu “Jaya Abadi” has a policy that every dairy farmer who have successfully breed the cow until 10 is released from partnership with Koperasi Susu “Jaya Abadi”. They are encouraged to be independent dairy farmers.

Overall impact

Koperasi Susu “Jaya Abadi” bought fresh milk from dairy farmers at more expensive price than Koperasi Unit Desa. In 1995, Koperasi Susu “Jaya Abadi” bought milk at Rp 625 per litre compared to Koperasi Unit Desa's price of only Rp 565 per litre.

Nowadays, Koperasi Unit Desa gets margins of Rp 400 – Rp 500 per litre. Koperasi Susu “Jaya Abadi” gets margins of only Rp 150 - Rp 200 per litre. Koperasi Susu uses this margin to cover their operational cost.

Because of Koperasi Susu Jaya Abadi can buy fresh milk from dairy farmers at good price, economy in Desa Bendosari improved. Desa Bendosari was the smallest desa in Kecamatan Kademangan, Kabupaten Blitar, but with Koperasi Jaya Abadi presence, Desa Bendo Sari became desa with the highest per capita income in Kabupaten Blitar.

Business benefit

National milk producers buy milk from Koperasi Susu “Jaya Abadi” at Rp 5400 per litre for Total Solid 12% Grade 1. They buy at lower price for lower Grade. Koperasi Susu “Jaya Abadi” take Rp 200 per litre for operational cost (cooling unit, transportation, and Koperasi employees). Even tough the margin lower than Koperasi Unit Desa, Koperasi Susu “Jaya Abadi” still get the business benefit because of volume of the fresh milk they sold. Koperasi Susu “Jaya Abadi” sold 100 ton fresh milk per day, it means they get Rp 20 million per day or Rp 600 million per month.

Koperasi Susu “Jaya Abadi” only take lower margin because they want to give Sisa Hasil Usaha upfront, not like other Koperasi. This make dairy farmers motivated to have cows.

Social and environmental benefit

Desa Bendosari was the smallest desa in Kecamatan Kademangan, Kabupaten Blitar. The villagers are clever but they don’t want to work in the village. Now, they want to stay in the village to build their village.

“If you want to know the benefit for dairy farmer, ask them not me.” said Handoko. People in Desa Bendosari have cow because they know that it will give business benefit for them. Because fresh milk give benefit to the farmer, they want add the number of the cow they had.

With Jaya Abadi presence, Desa Bendo Sari became the highest per capita income in Kabupaten Blitar. Jaya Abadi can reduce poverty in Desa Bendosari. Koperasi Susu Jaya Abadi can increase economic growth in Desa Bendosari.

Dairy farmer can be used to reduce poverty. After Merapi eruption, Koperasi Susu Jaya Abadi helped dairy farmers in Merapi. Their fresh milk production now achieve 10 ton per days.

Interview

Amor Kodrat, Koperasi Susu Jaya Aa