The International Labour Organization (ILO) and Indonesia’s Financial Services Authority (OJK) launched the Dairy Ecosystem Digitalization Programme in Malang, East Java, as part of the SECO-supported Promise II Impact project. The initiative aims to enhance financial inclusion and cooperative efficiency by connecting dairy farmers, cooperatives, and financial institutions through an integrated digital system, marking a key step in modernizing Indonesia’s dairy sector.
The programme focuses on expanding access to finance and strengthening local economies through technology, particularly for smallholder dairy farmers who have traditionally been underbanked. By introducing an Enterprise Resource Planning (ERP) system, the project integrates core cooperative functions, including milk collection, logistics, finance, and animal health, into one transparent digital platform. The system also links with Alternative Credit Scoring Providers and Financial Services Aggregator Operators, allowing lenders to better assess risk and extend credit to small-scale farmers.
According to ILO’s Promise II Impact Project Manager, Djauhari Sitorus, the digital ecosystem has already demonstrated success in Pangalengan, West Java, improving productivity, financial access, and animal health. The East Java rollout aims to replicate these benefits, providing a scalable model for inclusive financial and agricultural systems. Malang, home to more than 12,000 dairy farmers and over 85,000 cows, offers a strong cooperative base that makes it an ideal pilot for digital integration across the value chain, boosting efficiency, transparency, and income for smallholders.
The launch event included discussions on practical implementation of digitalization in dairy cooperatives, featuring speakers from the ILO and local cooperative leaders who shared lessons from West Java and outlined opportunities for East Java. The ERP platform is designed to strengthen cooperative governance and improve farmers’ access to finance by ensuring better data visibility and more accurate credit scoring.
The programme concluded with a field visit to local dairy farms in Malang, where participants observed best practices and explored potential collaborations to enhance the sustainability and competitiveness of the region’s dairy sector. The initiative represents a significant step toward leveraging technology for inclusive economic growth and financial empowerment in Indonesia’s agricultural communities.
