Members of the South Bandung Agricultural Cooperative (KPBS) recorded a 38 percent increase in performing loans and a 43 percent increase in sales volumes over the past two years, following the introduction of a new business application.
“Easier access to financing means higher loan volumes, which means more livestock and higher incomes for our farmers,” said Aun Gunawan, director of KBPS. “This is how financial inclusion leads to improved livelihoods. »
Indonesian dairy farmers are using a new business app that is helping them increase sales.
Founded in 1969, KPBS has 5,000 members and produces 70,000 tonnes of milk per day. The cooperative operates its own dairy, using about 15 percent of its milk production to make yogurt and mozzarella cheese, with the remainder sold to area dairy companies.
In addition, the cooperative operates a hospital, a veterinary service and a bank, all designed to support members and improve their well-being and competitiveness.
Holistic and healthy
“We take a holistic approach and for us it’s all about health, not just the health of farmers and their livestock, but also financial health,” Gunawan explained to the heads of UN agencies in Indonesia, who visited KPBS as part of their annual leaders’ dialogue on the UN’s direction in the country.
The International Labor Organization (ILO) is now supporting the cooperative in implementing this vision, leveraging digitalization to strengthen financial inclusion. The project is implemented in cooperation with the Indonesian Financial Services Authority (OJK) and the Coordinating Ministry of Economic Affairs.
A worker checks the pH of semi-fermented milk as part of the cheese production process.
“KPBS was already a strong and well-managed company before our participation,” said Simrin Singh, ILO country director for Indonesia and Timor-Leste. “The tools we provided have catalyzed further improvements and improved livelihoods. »
Thanks to the commercial application of the Enterprise Resource Planning (ERP) system – introduced by the ILO as part of a project funded by the Swiss government – farmers can now track their income and expenses, including the cost of fodder provided by the cooperative.
They also have 24/7 access to the cooperative’s veterinarians, who can reach farms within 30 minutes.
The app records each animal’s veterinary data, including vaccination schedules, allowing milk collection points to separate milk from recently vaccinated cows. Mixed with regular milk, this milk could reduce the overall quality of the day and therefore the sale price.
Higher volume, better price
“These practical improvements have contributed not only to higher volumes but also to better prices per liter sold,” Mr Gunawan said.
However, the most significant impact has been improved access to finance. The cooperative has managed its own bank since 1993 to provide credit to farmers.
With the ERP system, loan applications have become simpler and more accessible, Ms. Singh said. The bank can now view farmers’ financial data – income, cash flow and outstanding debt – directly through the system, resulting in a higher rate of approved applications.
Applications have also increased. Thanks to the integrated ERP tool, farmers no longer need to travel or queue to fill out forms; they can apply directly through the app, where their financial history is already recorded and available to the lending team.
Dairy cows feed on a farm in Pangalengan, West Jave, Indonesia.
“It may seem like a matter of convenience, but it’s much more than that,” said dairy farmer Encih Mintarsih. “Farmers cannot easily leave their livestock half a day, let alone multiple times, to submit an application that might not even be approved.
“We can now apply online and spend our time productively. This makes us much more likely to pursue funding,” she added.
Towards food self-sufficiency
Programs like this have broader national relevance: strengthening domestic food production and self-sufficiency is a top priority for the Indonesian government.
The country currently imports around 80 percent of its dairy products. Improving the productivity and competitiveness of local milk producers directly contributes to national self-sufficiency goals. It also provides a model for inclusive rural economic growth.
“In an upper-middle-income country like Indonesia, digital transformation of the economy and better access to finance are essential to progress towards high-income status,” said Gita Sabharwal, UN Resident Coordinator in Indonesia. Indonesia. “For this reason, in close consultation with the government, digitalization and access to finance are key priorities of the new cooperation framework between the UN and Indonesia.
The United Nations Sustainable Development Cooperation Framework (UNSDCF), signed in August 2025 and aligned with the SDGs and Indonesia’s national development agenda, describes how the UN will contribute to three transformative outcomes in the country, including economic and digital transformation.
“This exceptional ILO program demonstrates how the UN can complement governments’ efforts to accelerate inclusive development through modern technology,” said Ms. Sabharwal.
The project directly contributes to the OJK Rural Bank Transformation Plan, strengthens the inclusive financial ecosystem model, and supports the efforts of the National Committee on Financial Literacy and Inclusion to improve financial literacy and inclusion. It also aligns with national priorities to digitize small and medium-sized enterprises (SMEs) and boost productivity through digital tools.
“In Indonesia, 90 percent of jobs are created by SMEs, so improving their competitiveness is essential to ensure decent work,” said Ms. Singh.
The objective is for this approach to be deployed more widely across the entire territory.
What advice does Mr Gunawan give to other cooperatives and policy makers? “Show farmers clear, tangible benefits, and they will quickly adopt digital technologies,” he said.
“Buzzwords like ‘digitalization’ and ‘financial inclusion’ need to be translated into their daily reality – just like we have done here with the support of the ILO and the UN.
Originally published in The European Times.
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