Kadin Indonesia Urges OJK to Launch Fiscal Policies for Farmers

JAKARTA, Investortrust.id – The Indonesian Chamber of Commerce and Industry, or Kadin Indonesia, has urged the Financial Services Authority (OJK) to introduce fiscal policies that would enable farmers to access financing more easily. The initiative aims to strengthen the agricultural sector and support economic growth.

The proposal was raised by Kadin Indonesia’s Deputy Chairman for Food, Mulyadi Jayabaya, during a discussion with OJK Chairman Mahendra Siregar at the Financial Lecture event hosted by Kadin Indonesia in Jakarta on Friday, Feb. 28, 2025.

“We hope for a fiscal policy tailored for farmers. It is extremely difficult for farmers to access People’s Business Credit (KUR) from banks. If financing for farmers is facilitated, it will significantly contribute to economic growth,” Jayabaya stated.

Farmers Rely on High-Interest Online Loans

Jayabaya highlighted that many farmers have resorted to high-interest online lending platforms due to the difficulty of obtaining traditional bank loans. For instance, cultivating one hectare of rice requires approximately Rp 17 million ($1,100), with Rp 8 million ($520) allocated for fertilizers and planting, while the remaining Rp 9 million ($580) covers labor costs.

Given the limited access to bank loans, many farmers turn to online lenders, which impose steep interest rates, making them vulnerable to financial strain.

“The reality is that farmers borrow Rp 17 million from online lenders, but when they sell their harvested rice, it is bought at low prices. These platforms essentially act as loan sharks,” Jayabaya said, citing his personal experience in rice farming in Lampung.

Proposal for Sustainable Agricultural Credit Scheme

To address this issue, Jayabaya proposed a government-backed agricultural credit scheme that would provide farmers with loans of at least Rp 15 million ($970), repayable in two installments. These loans, he suggested, could be distributed through farmer groups, cooperatives, or directly to farmers who meet the eligibility criteria.

He stressed that ensuring accessible financing for farmers is crucial to strengthening national food security.

“Food security will significantly improve if farmers are supported through a structured financing program,” he emphasized.