ILO–AFTECH Partnership to Boost Dairy Farmers’ Financing with Digital Innovation

Beyond improving credit assessments, the collaboration will design customised financial products for dairy farmers and micro, small, and medium enterprises (MSMEs).

Indonesia’s dairy sector is on the cusp of transformation. Growing domestic demand—spurred in part by government initiatives such as the Free Nutritious Meals Program—is outpacing local supply, which currently meets less than 25 per cent of national consumption. Most of that production comes from smallholder farmers who face barriers such as limited access to capital, outdated farming methods, and fragile supply chains. To close this gap, significant investment in herd expansion, modernisation, and financing systems is urgently needed.

In response, the International Labour Organization (ILO) and the Indonesia Fintech Association (AFTECH) have joined forces to improve financial access for smallholder dairy farmers through digital innovation and alternative credit scoring. Their collaboration was formalised on 12 August 2025 at a signing ceremony in Semarang, marking the launch of a pilot initiative designed to reshape rural financing.

A Pilot Blending Fintech with Farm Data

The programme falls under the ILO’s Promise II Impact project—“Promoting SME Enterprises through Improved Entrepreneurs’ Access to Financial Services”—funded by the Swiss State Secretariat for Economic Affairs (SECO). Running from August 2025 to June 2026, the pilot will focus on East Java, a key dairy production hub.

At its core, the initiative will integrate Enterprise Resource Planning (ERP) systems used by dairy cooperatives with fintech platforms. This integration will capture real-time production and income data, creating accurate digital profiles of farmers’ productivity and financial health. These profiles will allow lenders to move beyond traditional collateral-based assessments, opening doors for smallholders who have long been excluded from formal credit markets.

Djauhari Sitorus, ILO Project Manager for Promise II Impact, highlighted the impact: “This initiative will unlock opportunities for farmers who have been historically underserved by formal financial systems. By integrating ERP data with fintech solutions, we can help financial institutions make faster, more accurate lending decisions and empower farmers to invest in their businesses.”

Tailored Financial Solutions for Farmers

Beyond improving credit assessments, the collaboration will design customised financial products for dairy farmers and micro, small, and medium enterprises (MSMEs). These will include:

• Asset financing for livestock, milking machinery, and cold-chain equipment.

• Client-focused working capital loans aligned with seasonal production cycles.

• Fintech-enabled credit lines to provide flexible, affordable financing.

To ensure long-term sustainability, the project will also deliver training in digital literacy and financial management, enabling farmers to effectively manage their finances and use digital tools.

AFTECH’s Role in Scaling Financial Inclusion

Established in 2016 as Indonesia’s official fintech industry association, AFTECH represents more than 300 fintech firms and plays a leading role in shaping policy, innovation, and partnerships. Under this initiative, AFTECH will advise on technology solutions, connect financial service providers, and ensure that innovations are scalable beyond the dairy sector.

Anggie Setia Ariningsih, AFTECH Vice Chairwoman III, underscored the wider ambition: “Through this partnership with the ILO, we aim to create sustainable financial solutions that can be scaled to other sectors beyond dairy. By leveraging real-time data that reflects productivity and potential, fintech has the power to bridge the financing gap for farmers.”

Building a Model for Agricultural Finance

The pilot will be conducted with close coordination from the Financial Services Authority (OJK), ensuring regulatory compliance and paving the way for broader adoption. If successful, the initiative is expected to serve as a model for digital financial inclusion in other agricultural value chains such as fisheries, coffee, and horticulture.

For Indonesia, strengthening the dairy sector carries economic and social significance. Expanding domestic milk production would reduce reliance on imports, improve nutrition outcomes, and generate rural employment. At the same time, enabling farmers to access affordable, tailored financial services strengthens resilience against market volatility and supports the country’s long-term development goals.

Looking Forward

The ILO–AFTECH collaboration demonstrates how digital innovation, international cooperation, and local partnerships can work together to close financing gaps in agriculture. By empowering smallholder farmers with access to fair credit, the initiative could transform dairy farming into a more productive, competitive, and sustainable industry—with ripple effects across Indonesia’s rural economy.