CSP and IFC Efforts in Providing Access to Finance for Smallholder Cocoa Farmers

Jakarta, July 10, 2023—Smallholder cocoa farmers in Indonesia face several challenges in efforts to increase cocoa productivity nationally. One of the most perceived issues is the availability of financing support from banking and financial institutions that can be invested in cocoa farming sustainably. This is also the basis for the government’s allocation of loans schemes that do not add to the burden of farmers’ economy in the form of Micro Credit Program (Kredit Usaha Rakyat/KUR) through state-owned banks. However, it cannot be denied that the distribution and access of KUR has not evenly distributed.

Data of the Directorate of Agricultural Finance, the General Directorate of Agricultural Infrastructure and Facilities, the Ministry of Agriculture, shows that the distribution of Agricultural KUR for the plantation sub-sector in the 2023 fiscal year 2023 per 30 May 2023 is about 9,26 trillion rupiah with 136.958 debtors. The amount included in it is KUR for the cocoa commodity of 148.3 billion rupiah where the highest distribution area is in the Central Sulawesi Province with the amount of 44.8 billion rupiah.

However, the smallholder cocoa farmers in the Central Sulawesi Province recognize that it is very difficult to access the Cocoa-Specific KUR facility. They had applied for a loan several times to the state bank but were rejected. The reason was that the loan quota with the KUR facility had expired. Even the data from the Directorate of Agricultural Finance said that by 30 May 2023, the distribution of KUR nationally was 25,1 trillion rupiah, or only 25.1% of the target of 100 trillion rupiah.

In an effort to provide access for smallholder cocoa farmers, the Cocoa Sustainability Partnership (CSP) held a coordination meeting with the International Finance Corporation (IFC) in Jakarta, 10 July 2023. The meeting was also attended by Olam Food Ingredients (ofi) as a member representative of CSP.

“In addition to discuss about providing access of financing support for farmers, CSP and IFC also discuss alternatives of joint efforts in supporting smallholder cocoa farmers in Indonesia in accessing government subsidized NPK Specific Formula Fertilizers,” said Wahyu Wibowo, Executive Director of CSP. The meeting is also a first step in the effort to provide qualified cocoa planting materials for farmers. The availability of rootstock gardens in the center of cocoa plantation development in Indonesia will have a major impact in efforts to increase the productivity of cacao nationally through rejuvenation of crops. (CSP/AH)