Microfinance Workshop for Boalemo Farmers
In order to switch from maize farm to cocoa agroforestry farm as well as maintain the cultivation growing optimally and expanding the cocoa farm in Boalemo, it needs financial support from other parties. BRI is one of the banking institutions that have representative offices everywhere, including in the Boalemo regency and has the potential to become microfinance institution which could provide loans to farmers in Boalemo.
The workshop aims to introduce banking products as well as improve the knowledge related to credit scheme for farmers and extension officers in Boalemo regency.
The workshop was held in Agriculture and Plantation Agency office of Boalemo and attended by 13 farmers from 40 famers invited; extension officers; head of Cooperative, Industry and Commerce; BRI Limboto, BRI Boalemo; and staffs of Agriculture and Plantation Agency.
The head of Boalemo cooperative, industry and commerce agency opened the workshop and he stated that a cooperative is an institution that can formally be able to manage finances with a valid legal entity. Cooperatives can be formed with a minimum of 20 members were consulted to determine the type of cooperation that will be managed. To facilitate the assistance and escort program, he encouraged cocoa farmers of Boalemo to form special cooperatives of cocoa engaged in the provision of seeds, fertilizer and marketing. The capital of cooperative can also be obtained from banks. The cooperatives can also be a credit union that may help farmers of borrowing capital. The interest rate in cooperative is maximum 2,5% per month. That way is better than farmers borrow cash from middleman with very high interest rate.
In his speech, the representative of the Boalemo agriculture and plantation agency said that he was very grateful for the implementation of this workshop and expected after the farmers know about the credit scheme of BRI, farmers will be forced to borrow at BRI than farmers pay interest of 5% per month for debt fertilizers and pesticides in some shops.
BRI as the keynote speaker for this workshop explained the credit scheme suitable for small scale business including farmers, namely, Kredit Usaha Rakyat (KUR/community enterprise credit). KUR is working capital credit and or investment to individual debtor which has productive and decent business with maximum of 25 million rupiah loan principal in which the fund fully funded from BRI. The bank interest applied is effective 9% per year. KUR credit scheme doesn’t require any collateral. Any individual can apply this credit including farmers with the requirement to have ID such as KTP, family card or married certificate; micro and small enterprise permit (IUMK) or business certificate; and one page color photo size 3x4. Business certificate can be obtained from the head of village where the farmers live but this document is valid only for one time credit application. Whereas, IUMK can be obtained from head of local sub-district with very simple documents requirement including ID card and the detail information of the business. IUMK validity period is as long as the person is still running the business. It does not cost anything in this credit application process. After the debtor submit all the necessary requirements, and then the bank will conduct a survey and doing analysis of repayment capacity to determine the amount of credit approved.
Besides KUR credit schemes explained above, BRI also has other credit schemes with total loans of more than 25 million rupiah. Farmers can be applied a credit more than 25 million depending on the purpose of each farmer and the amount of credit granted will be determined by the bank based on the analysis of repayment capacity.
From the discussion sessions revealed that some farmers who were present in the workshop, had borrowed money at BRI but to finance corn crop, consumptive purpose and their other businesses, not to finance their cocoa farm. One of them has ‘bad’ experience with BRI where he only applied for a loan of 25 million but was forced by the bank officer to borrow 30 million. In this case the BRI team confirmed that it was not bank regulation, but only the actions of individual bank officers who abuse their authority. If farmers face less pleasant things that are related to credit application, they can directly contact the head of the bank concerned to get proper information.
Another farmer asked why he received credit which was smaller than the amount asked. The bank said that the determination of the amount of credit granted based on the survey and analysis made by the bank against the debtor related socio-economic condition of the debtor. If the condition debtor considered capable to pay more, the bank may offer to give a bigger credit than proposed.
For farmers who just start planting cocoa, the bank provides special KUR credit scheme, where the bank give a tenor of one year and famers can do one time installment. If in the given time, but they have not been able to pay the debt, then the bank will reschedule its repayment term, and the maximum tenor is two years from the farmers received the credit.
At the moment BRI Limboto does not have any special insurance for agricultural products. BRI only have life insurance.
In conclusion, KUR micro is credit scheme which suitable for farmers in Boalemo where the requirements are easy and the interest rate is relatively low compared to other credit schemes. Farmers can easily apply for this credit and reach the bank because in Boalemo has had three offices of BRI, namely BRI Tilamuta, BRI Manangu and BRI Paguyaman.
Boalemo Agriculture and Plantation Agency will support BRI to give the necessary information related to the condition of farmers in Boalemo in order to facilitate the BRI in analyzing the socio-economic conditions of farmers who apply for credit.
BRI has provided 20 billion rupiah through KUR scheme credit to 2000 customers in Boalemo and 40% of them are farmers.