“Easier access to finance means higher loan volumes, which in turn means more livestock and higher income for our farmers,” said KBPS director Aun Gunawan. “This is how financial inclusion leads to better livelihoods.”
Indonesian dairy farmers are using a new business-focused app that is helping them boost sales.
Founded in 1969, KPBS has 5,000 members and produces 70,000 tons of milk a day. The cooperative operates its own dairy plant and uses about 15 percent of its milk production to make yogurt and mozzarella cheese, while the rest is sold to dairy companies in the region.
In addition, the cooperative runs 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 told the heads of UN agencies in Indonesia, who visited KPBS as part of their annual Leadership Dialogue on shaping the UN’s trajectory 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 involvement,” said Simrin Singh, ILO Country Director for Indonesia and Timor-Leste. “The tools we have provided have catalyzed further improvements and improved livelihoods.”
Through the Enterprise Resource Planning (ERP) system business application, introduced by the ILO under a project funded by the Government of Switzerland, 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 the farms within 30 minutes.
The app records veterinary data for individual animals, including vaccination schedules, allowing milk collection points to segregate milk from recently vaccinated cows. If mixed with regular milk, such milk could reduce the overall quality of the day and therefore the selling price.
Greater volume, better price
“These practical improvements have contributed not only to higher volumes but also to better prices per liter sold,” Gunawan said.
However, the most significant impact has been improved access to finance. The cooperative has run its own bank since 1993 to offer credit to farmers.
With the ERP system, loan applications have become easier and more accessible, Ms Singh explained. The bank can now view farmers’ financial data (income, liquidity and outstanding debt) directly through the system, resulting in a higher rate of approved applications.
Requests have also increased. With the integrated ERP tool, farmers no longer need to travel and 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, western Jave, Indonesia.
“This may seem like a matter of convenience, but it is much more than that,” said dairy farmer Encih Mintarsih. “Farmers cannot easily leave their livestock for half a day, let alone several times, to submit an application that may not even be approved.
“Now we can apply online and spend our time productively. That makes us much more likely to seek funding,” he 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 Government of Indonesia.
Currently, the country imports about 80 percent of its dairy products. Improving the productivity and competitiveness of local milk producers contributes directly to national self-sufficiency goals.
It also provides a model for inclusive rural economic growth.
“In an upper-middle-income country like Indonesia, the digital transformation of the economy and improved access to finance are essential to move towards high-income country status,” said Gita Sabharwal, UN Resident Coordinator in 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, outlines how the UN will contribute to three transformative outcomes in the country, including economic and digital transformation.
“This outstanding ILO program demonstrates how the United Nations can complement the Government’s efforts to accelerate inclusive development using modern technology,” said Ms Sabharwal.
The project directly contributes to the OJK Rural Banks Transformation Plan, strengthens the inclusive financial ecosystem model and supports the efforts of the National Committee on Financial Education and Inclusion to improve financial education and inclusion. It also aligns with national priorities to digitize small and medium enterprises (SMEs) and boost productivity through digital tools.
“In Indonesia, 90 per cent of jobs are created by SMEs, so improving their competitiveness is key to ensuring decent work,” said Ms Singh.
The intention is for this approach to be implemented more widely across the country.
What advice does Mr Gunawan have for 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’ must be translated into your daily reality, just as we have done here with the support of the ILO and the United Nations.”