OJK and ILO Launch ERP System to Boost Credit Access for Dairy Farmers

Jakarta - The Financial Services Authority (OJK) together with the International Labour Organization (ILO) has released an Enterprise Resource Planning (ERP) system to improve access to formal financing for dairy farmers.

Chief Executive of the Financial Sector Technology Innovation, Digital Financial Assets, and Crypto Assets (IAKD) Supervisor at OJK, Adi Budiarso, explained in a written statement in Jakarta on Friday that farmers often face obstacles in accessing formal financing. These obstacles are primarily triggered by information asymmetry, including limited valid data, unclear business profiles, inconsistent production capacity, and poorly documented financial conditions of the farmers.

In response, OJK and ILO developed a digitalisation programme for the dairy farming ecosystem built on two main foundations: strengthening a sustainable business ecosystem and building reliable digital infrastructure. This allows the system to provide a more accurate picture of production capacity, business quality, and the financial condition of farmers.

The ERP system is integrated with Alternative Credit Rating (PKA) services and Financial Service Aggregation Providers (PAJK) to bridge farmers with the formal financial services ecosystem. “Through the data generated by this ERP system, alternative credit rating agencies can build farmers’ credit profiles more objectively, accurately, and inclusively,” said Adi.

The ERP system has been implemented in three priority dairy cooperatives in East Java: Koperasi Agro Niaga (KAN) Jabung, Koperasi Peternak Sapi Perah Setia Kawan (KPSP Setia Kawan), and KPUD Tani Wilis. According to OJK, the total membership of these three dairy cooperatives reaches 10,000 cooperative members.

OJK, together with stakeholders, is discussing the expansion of the programme’s implementation throughout East Java. The success of the implementation in these three cooperatives is expected to become a model that can be replicated in various other sectors and regions in Indonesia.