The Long Road to Improving Quality for Mutual Benefits

Mr. Pariatmoko of the Department AgriService Nestlé factory in Kejayan conducts a routine visit to a farmer.

Although Nestlé owns no agricultural land, we strive to assist dairy farmers to achieve better standards in agriculture - increasing their income - and help them implement sustainable agricultural practices.

May 22, 1975 was a historic moment for us, as well as the cattle ranchers of Pujon Cooperative, because it was the first time they were able to send fresh milk to the factory at Waru. Previously, we imported milk solids, because supplies of fresh milk from the region were inadequate. Conditions slowly began to change with the arrival of a team of agronomists, who analyzed the situation in the field, and concluded good quality fresh milk could be produced in quantity in East Java, provided the supply chain (from cows to plant) was upgraded. We also provided low-interest loans to several cooperatives for purchasing cooling equipment, an important step in ensuring the quality of fresh milk.

This 1975 success story is only the beginning. In 1985, due to increased demands for quality fresh milk, we established the Department of AgriService to provide technical assistance to all our suppliers. In 1988, our factory moved to Kejayan. Our first step was to provide vital refrigeration equipment to three cooperatives. The next step involved introducing good farm management techniques to farmers to ensure the production of high quality milk and maintain the health of their livestock.

Today, the Department of AgriService has been replaced by the Milk Procurement and Dairy Development Department, to better meet the needs of the farmers and Nestlé.

The milk procurement team initially focused on cooperative operations (how to collect fresh milk), to increase the quality of fresh milk. Then, we provided low-interest loans to help famers produce milk at competitive prices and improve the means of collecting milk (milk transportation and collection centers). Our training of cooperative staff helped them apply standard operating procedures throughout the supply chain, as well as during several cooperative audits, to ensure compliance with milk quality standards set by Nestlé, and also to encourage continuous improvements in the management of cooperatives.

Milk quality improvement teams worked with cooperatives and farming groups, both old and new, on improving the quality of their livestock on an ongoing basis (ways to produce more fresh milk), for higher productivity and greater efficiency. We helped farmers gain access to farm loans to increase numbers of cows and provided training in fundamental farm management (hygiene, animal health, feeding, feed formulation).

At morning and evening milking sessions in the shelters, it’s a common sight to see on-site personnel performing tests to determine the quality of the freshly collected milk.

Efforts over more than 30 years have brought us great improvements in the quality of fresh milk; a consistent supply is delivered to the factory at Waru and Kejayan. Our efforts have convinced our suppliers to increase production quantities.

We have reduced our dependence on imported milk solids. Farmers now enjoy a higher standard and quality of life as a result of their improved farms. We, together with our suppliers, the farmers and dairy cooperatives, will continue to work hard to meet increasing demands for dairy products in the market, and ensure long-term, sustainable development of the livestock sector.

In 2008-2009 we made investments worth approximately 100 million U.S. dollars to double our production capacity for powdered milk products and fluid milk products at the Kejayan factory. This ensures we can process more fresh milk from farmers in the coming years.