Economist: Agricultural KUR Disbursement Hasn't Been Enjoyed By All Small Farmers

Illustration (Photo: Doc. Antara)

JAKARTA - Segara Institute Executive Director Pieter Abdullah said, so far the distribution of People's Business Credit (KUR) for agriculture has not been able to be enjoyed by all farmers, especially small farmers.

Pieter said, it is difficult for small farmers to get access to KUR financing. In fact, he continued, the performance of small farmers also has an impact on maintaining food security in the country.

"Those who don't get it are small farmers. (They) have difficulty getting access to financing," said Pieter, Thursday, October 6.

Therefore, according to Pieter, the government needs to increase the amount of agricultural credit, competing with the existence of commercial credit.

"In the past, with food credit (commercial products of BUMN), IDR 1 trillion, now with KUR it can be IDR 10 trillion. We just said that KUR contributed greatly in encouraging food credit which in the end increased food productivity," said Pieter.

KUR Not Right on Target

Similarly, an agricultural expert from the Bogor Agricultural University (IPB) University Dwi Andreas Santosa said, so far KUR has not touched small farmers. Although it is recognized that KUR is beneficial for the development and revival of micro, small and medium enterprises (MSMEs).

"In my opinion, KUR is not right on target. Yes, it is indeed useful, obviously, for example for MSMEs," said the man who is also a senior economist at CORE Indonesia.

The Association of Indonesian Seed Banks and Farmer Technology (AB2TI) conducted a study related to the amount of KUR absorption by small farmers. Andreas said, the results show that KUR is absorbed more by middle-class business actors than small farmers.

"From the results of the study, small farmers who absorb KUR are less than 1 percent. It means who absorbs KUR? Yes, middle-man," he said.

According to Andreas, the reason is that the implementation of KUR adheres to banking rules and regulations, such as the existence of collateral and the amount of installments that are considered difficult for small farmers. He said this would not allow small farmers to access the program.

Therefore, Anderas also suggested that the government create a new mechanism that is more friendly to small farmers. "We have to find a mechanism for distributing KUR, so that small farmers can absorb the KUR," said the Ketum AB2TI.

Furthermore, Andreas admits that small farmers really need KUR. Therefore, the government is also to issue new banking regulations to make it easier for small farmers to access KUR.

"The government must issue new banking regulations, so that small farmers who do not have collateral, who do not know technology, who do not know anything can absorb the KUR," he said.

In addition, said Andreas, the long process of managing KUR is also a problem in itself. According to Andreas, farmers cannot wait for months to get funds for farming.

"So we need a mechanism, of course the banks cannot be blamed, if they don't follow the rules, they will be hit. So the rules have been changed," he said.

However, Andreas emphasized that when the government makes new rules and mechanisms for distributing smallholder-friendly KUR, it will not solve the problem. There are other challenges that arise from the limitations of smallholders.

"Even if there is a regulation, it's not necessarily small farmers can access KUR. Because of their limitations, they have to fill out forms, administrative requirements that they have to fulfill. Especially with the education level of our small farmers," he concluded.

Previously, the Coordinating Minister for the Economy of Indonesia, Airlangga Hartarto, explained various programs issued by the government to support small businesses. One of them is the people's business credit (KUR).

According to Airlangga, KUR greatly contributes to food security. In fact, Indonesia has received appreciation from international food organizations.

"People's business loans greatly contribute to food security. So yesterday it received appreciation from the world food and agriculture organization or the Food and Agriculture Organization (FAO) and various world institutions," said Ketum Golkar.