Realising business ambitions dairy cooperative in East Java

KUTT Suka Makmur was established in September 1968 and is one of the biggest milk producers in East Java Province. The main activity of the cooperative is the collection of fresh milk and the transport to the Frisian Flag factory in Jakarta, a 840 kilometers drive which takes 28-30 hours. They produce 64 tons of fresh milk per day with about 2,567 members and 220 staff members. Working area of KUTT Suka Mamur are five sub-districts of Pasuruan including Grati, Lekok, Lumbang, Nguling, and Rejoso with a population of cattle around 18,000 of which 9,000 lactation cows. Average milk production per cow is 9.5-10 liters/day. Dairy milking time is done twice a day at 5-6 o'clock in the morning and in the afternoon at around 2-3 pm. Fresh milk is then send to one of the 17 milk collection points (MCP). The cooperative consists of eight business units: production, milk processing, Saving & Loan, logistic, supermarket, farm, feed factory and silage factory. A new business unit (pasteurized milk) will be started in 2016. The quality of the milk is good due to good infrastructure and facilities such as cooled milk collection centre and reliable transportation system. The payment system is transparent with clear overview of the quality of milk produced every 10 days. The challenge for the cooperative in the upcoming years is how to make the right decisions on priorities for investments to be made. Develop a short-term and long term strategy plan will give the cooperative the right direction for its development. The board and management need to make a and meticulously rational business plan for the cooperative, especially related to side business and dairy farmers i.e. animal feed units either concentrate (yellow feed) or green forage (silage) as well as animal health services. On the aspect of cooperative governance, KUTT Suka Makmur is currently heading away from the family management model towards professional management. To achieve this goal, the organization needs capable leaders who are able to encourage and walk along with the staff, having a strong vision on how this cooperative in the coming decade will develop. Improvements in the governance of the cooperative have started and will continue to take place including the changing mindset of employees from the traditional cooperative towards a modern and professional cooperative. Human resources management needs to be improved to make good governance i.e. provide training for management and staff on performance assessment, job profiles, and job descriptions. There are several other aspects that need to be developed in a cooperative such as written internal procedures even though there have been good practice in unit Yellow Feed by having ISO 9001 certificate. In general cooperative has done well and has the potential to develop further in the future.