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Jakarta Post

RI farmers need innovative financing to boost productivity

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Tue, September 17, 2013   /  11:14 am

The Indonesian Chamber of Commerce and Industry (Kadin Indonesia) is calling for better access to finance for farmers to help increase their productivity.

Franky O Widjaja, the Kadin Indonesia deputy chairman for agribusiness, food and husbandry said that productivity and efficiency must be pushed.

He noted that currently there were new and promising systems in Indonesia, such as warehouse receipts, which can be used as collateral for credit from banking institutions.

The system also allows the transfer of ownership of commodity without having to deliver the physical commodity.

Franky said that currently Kadin Indonesia was designing an agribusiness financing package for oil palm plantation farmers that would be a prototype to be developed further for a wider scope of various other commodities.

'€œThe package will be in accordance with the 10-year Framework of Programmes on Sustainable Consumption and Production (10YFP) and involve cooperation between Kadin Indonesia and the Environment Ministry,'€ said Franky in a press release published on Monday.

The 10YFP is a global framework of action to enhance international cooperation to accelerate the shift toward sustainable consumption and production.

It will develop, replicate and scale up sustainable consumption and production and resource efficiency initiatives at national and regional levels, decoupling environmental degradation and resource use from economic growth, and thus increase the net contribution of economic activities to poverty eradication and social development.

'€œBut innovative financing for other commodities needs to be developed,'€ said Franky at the two-day Kadin Indonesia national meeting, which will end today.

Speaking separately, Agriculture Minister Suswono underlined the need for farmers to have access to financing.

'€œBut not only for crude palm oil [CPO] farmers, but also for other commodities as well,'€ he said.

A number of strategic commodities need innovative financing to reach ideal productivity, including palm oil, cocoa and tea.

Recently the Agriculture Ministry allocated Rp 492.42 billion (US$44.11 million) for the development of such strategic commodities.

Shinta W. Kamdani, Kadin Indonesia deputy chairwoman for environment and climate change noted that Indonesia was not only one of the biggest producers and exporters of natural resources, such as CPO and tea, but also one of the biggest consumers with the fourth largest population in the world.

'€œAn increase in production brings prosperity for farmers, but sustainable strategies have to start from a change in consumption paradigm by all layers of consumers,'€ she said.

She said that the government played an important role in designing educational programs on a national scale on the need to change consumption patterns.

'€œThe scale of implementation by the business sector needs to be raised to the national level with a clear principle of sustainability for future generations,'€ she added.

However, she admitted that Kadin Indonesia still had some homework, including increasing farmers'€™ productivity and their food value chain by pushing innovation in national food security and improved land governance. (asw)

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