Government subsidies for staple agr

Government subsidies for staple agricultural goods including milk in various OECD countries makes such products cheaper to import compared to locally produced fresh milk in Indonesia despite the 5% import duties and VAT applied to milk. Local, small scale producers implement suboptimal production methods such as for the feeding and nutrition of the cows as well as using domestic cattle breeds which produce inferior yields. Such producers are also failing to meet international industry standards in hygiene as they lack their own processing facilities and coordinated supply chain therefore only 12% of locally produced milk meets minimum industry standards and holds a significantly lower market value. Milk produced in Indonesia is therefore being used as a supplementary supply source in the production process as opposed to the main component of the supply chain.