Optimizing KUR for Coffee and Cocoa Farmers

INDUSTRY.co.id - Jakarta, Low interest credit program for coffee and cocoa farmers is expected to increase farmers' access to banks. It is expected to optimize the development of both leading industrial commodities.

Cocoa and coffee are still one of the primadonas of the clumps of plant freshener in the country.

Both of these plantations contribute to the largest non-oil exports after the commodity of oil palm and rubber. The existence of these two commodities in trading partner countries is also quite taken into account.

With 2019 cocoa production of 659,7 thousand tons, Indonesia is the third largest producer of cocoa beans in the world after Ivory Coast and Ghana.

In processed cocoa, Indonesia is the 2nd largest exporter of cocoa butter in the world, the 5th largest cocoa paste in the world and the 5th largest cocoa powder in the world.

As for cocoa bean, Indonesia's exports are at number 13. (UN Comtrade Data).

Cocoa also becomes a strategic commodity because it is a source of income for many people. The majority (88.48%) is managed by smallholders and a source of income of about 1.6 million farmers and more than 5,000 workers in the manufacturing sector.

However, it is unfortunate that the development of contribution to the state's foreign exchange for both commodities has not been optimal.

Among other things, the export volume of cocoa exports from 2011 to 2016 tends to decrease with an average volume of 364.18 thousand tons with an average export value of 1.2 billion US Dollars.

As for coffee, exports in 2011 tend to fluctuate with an average volume of 458.82 thousand tons with an average export value of 1.1 billion US Dollars up to 2016.

Some problems faced in the development of cocoa and coffee in the country is presented by the Director of Agricultural Finance Kementan, Sri Kuntarsih, at a seminar on financing of plantation commodities in Jakarta some time ago.

Starting from the condition of the plant (old and broken) so that low productivity, limited availability and quality of superior seeds, plant population has not been standard, less intensive plant maintenance, Human Resources (HR) and farmer institutions are still weak and lack of innovation and technology support.

In addition, there are constraints in the availability of facilities and infrastructure (harvest / post-harvest and production roads), difficulties in maintaining existing land, climate anomalies (el nino and la nina), limited plantation financing and accessibility, commodity competition (tight standardization of quality / certification) as well as consumer country issues related to environment, human rights and health.

Unlike oil palm that is managed by large plantations, the majority of coffee and cocoa plantations are managed by smallholders.

Especially for cocoa, about 88.48% of its agriculture is managed by smallholder plantations, 5.53% is managed by large state plantations and 5.59% of large private estates with main production centers are Central Sulawesi, South Sulawesi, Southeast Sulawesi, West Sulawesi, Lampung and Sumatera North.

The productivity of Indonesian cocoa is about 0.47 tons / ha, lower than that of 0,52 tons / ha and 0,51 tons / ha.

Among the issues, Sri highlighted the difficulty of accessing cocoa and coffee farmers to banking financing as one of the important issues that received the attention of the government.

The upstream industry of these two commodities is still very dependent on the downstream industry that is still not developing well enough.

The access condition of cacao and coffee farming banking was conveyed by the Chairman of Alumni Association of Bogor Agricultural School Business School, Rudy Irawan.

Currently only about 30% of coffee and cocoa farmers in Indonesia are getting financially through banking institutions, Rudy said.

Whereas in Rudy's calculation, if the two commodities are easy to get access to bank financing, there will be increased production multiply compared to the total production that exist today.

Credit Interest Only 7%

To deal with the lack of access of farmers to the funding, according to Sri, the government has prepared a credit scheme or working capital financing to debtors with productive and viable businesses including the agricultural sector called People's Business Credit (KUR).

In Fiscal Year 2018 The Government's Target Plan provides Rp 120 trillion for the KUR program in an effort to boost national economic growth. The KUR Budget Allocation is expected to increase lending to Micro and Small Enterprises, particularly in the agricultural sector, Sri said.

There are perks given by government in giving KUR. According to Sri Kuntarsih, farmers, including cultivators of cocoa and coffee can get a financing interest of 7%.

The amount of KUR interest has decreased from the previous figure of 9%.
Coupled with five year grace period facilitation, Sri hopes to be more accessible to cocoa and coffee farmers.

The new KUR interest rate of 7% is expected to be accessible to farmers. In addition, because cocoa and coffee are plantations and cultivation outside rice, grace period is given, for five years, he said.

Thus, Sri is optimistic that this new financing scheme can be a financing solution for cocoa and coffee farmers.

Added, the Coordinating Ministry for the Economy increased the portion of financing to plantations from 40% to 50% this year.

Especially for the cultivation of coffee, Sri projected growth will be better in the future, given the downstream industry of this commodity is growing well, through the people culture 'coffee' or drink coffee in coffee shops in the country.

Not only to provide easy access to capital, Sri continued, the government through the Directorate General of Plantation, also doing rehabilitation and rejuvenation program for coffee and cocoa.

This is because both commodities still have the opportunity to be developed larger and the extension of land can still be done.