Effective strategic plan secures 240,000 euros in loans

The KPSP Saluyu cooperative in Kuningan, West-Java is growing at a rapid pace. Together with Agriterra, they developed a well-thought out strategic plan in 2015, resulting in 240,000 euros in additional loans. The cooperative is investing this money in more cows, better concentrated feed and its organisational structure. 

KPSP Saluyu's aim is to increase daily milk production from 6000 kg to 10,000 kg in 2017. 9 months later and the production target has almost been hit, with a daily milk production of 9000 kg. These developments are effecting an increase in confidence in the cooperative, on the part of both investors and the government.

The results at a glance
Since the implementation of the strategic plan, developments have been rapid. The results so far:

• Growth in milk supply from 6,000 to 9,000 kg per day
• Confidence of financial backers and government
• Extra loans of  240,000 euros
• Procurement of 100 new cows
• Investments in bio-gas production, a truck and a milk tank

Delivering quality
In 2015, KPSP Saluyu was already supplying high quality milk to the Frisian Flag Indonesia factory in Jakarta. This is down to their good infrastructure, with temperature-regulated milk collection centres. The management board viewed this basis as a good starting point for further growth opportunities. KPSP Saluyu understood that a strong and financially stable cooperative with cost effective production was the key to attracting extra capital.

5-year strategic plan
In March 2015, Agriterra - via Agripool experts from FrieslandCampina and ABN AMRO - conducted a cooperative assignment. A strategic plan was drawn up on the basis of this assignment containing the trajectory for the next 5 years. One of the points of consideration was supply volume: If the cooperative is successful in supplying more milk, it will make better use of the available transport options and the cool tanks.

To turn this ambition into a reality, the cooperative wants its members to purchase more cows. They will also invest in their own production of better concentrated feed. On an organisational level, the cooperative wants to become stronger in several areas, including financial management and administrative structure.

Funding quickly found
With their strategic plan in hand, the cooperative received a 3.3 billion rupiah (200,000 euros) loan from the Rabobank. Part of this loan was used by members to buy 100 additional cows and to secure better concentrated feed. Furthermore, the organisation has invested in the production of bio-gas, a truck and a milk tank.

9 months down the line and with a production of 9,000 kg per day, the production target has almost been reached.  KPSP Saluyu now delivers better quality milk than other Frisian Flag Indonesia suppliers. This increases investor and government confidence in the cooperative,  which enabled them to secure an extra 600 million rupiah (40,000 euro) loan from the local bank, Sucofindo. Once again, extra cows were purchased. The government also pledged funds for a silo and a mixer, amongst other things.

"Taking steps forward with members"
Business consultant Richard van der Maden from Flynth is enthusiastic about the speed at which the cooperative is moving forward. Van der Maden: "After less than a year of working with Agriterra, the cooperative has taken some great steps forward. Now, non-members are also seeking out KPSP Saluyu. Due to the excellent services, technical advice and above all a transparent milk price, dozens of new milk farmers have joined the cooperative and even more farmers have expressed an interest in becoming suppliers to KPSP Saluyu.

Trust is an extremely important factor: not only from the local area, but most importantly from the members themselves. In 2016 we will continue our work there, in collaboration with them. We want to look into the possibilities of increasing 'internal capitalisation' - something that is still not well-established in Indonesia. Once again, the question of trust comes into play. As cooperative guru Gert van Dijk once said: the definition of cooperative is solid trust."