AGRICULTURE LENDING

One of Product Diversification and Potential Market

Tenny Yanutriana Prepared for: Academy Microfinance Development in Asia (AMiDA) Tuesday, May 24th 2011

AGENDA

Indonesia Agriculture Profile Agriculture Lending Portfolio BSY Agriculture Lending Composition Farmers Earning Key Factors Agriculture Lending Products

SWOT Analysis
Conclusions

Indonesian Agriculture Profile

60% of Indonesian population live in rural areas. 70% of rural population, 21.141.273 households live from agriculture. Most of the farmers grow rice and horticulture. The rest are in livestock, forestry and fishery.

Agriculture Lending Portfolio

Financial/Ownership/ Business Services Trade/Hotel/Restaura nt Manufacturing Industry Agriculture/Livestosk/ Forestry/Fishery 0 4000 8000

2009 2008 2007 2006

BSY Agriculture Loans Portfolio

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

462,955,447,89 4

594,601,467,70 4

625,713,667,68 7

74,446,696,140 Des '09

104,600,110,88 4 Des '10

113,161,947,60 7 Mar '11 Loan Portfolio

Agriculture Sector

Farmers Earning Key Factors

Product Quality Land Area Farmers Experience Agriculture Loans from Financial Institutions

Agriculture Lending Products

1. Lending Term: Short-Term Lending Long-Term Lending 2. Lending Borrower: Individual Group Lending 3.Purpose Use of Lending:: Working Capital Investment

Agriculture Process in General

1.
2. 3.

Land Preparation
Seeding Planting

4.
5. 6. 7.

Routine Maintenance
Fertilizing Harvesting Post-Harvest

Indonesian Agriculture Strength

Indonesian agriculture land area is 7.7 million Ha with good quality soils. Various products range from fruits and vegetables can be planted in Indonesia. The experience as farmers of Indonesian population is proven for hundred of years. Good characteristic of the farmer workers being locals and hard workers.

Indonesian Agriculture Weakness

Lack of financial access for the working capital or investment for the agriculture industry. Lower quality of agriculture products compared to other countries in Asia. Lack use of technology in running the industry and lack of knowledge of farmers to run their land efficiently and effectively.

Minimum supports from the government in order to increase the quality of products and access to international trading.

Indonesian Agriculture Opportunity

Huge market for domestic, regional, national and international market. Many new land for agriculture conversion.

Many research for enhanced quality product and product diversification.

Good opportunity to make chained business from production, distribution and selling the products.

Indonesian Agriculture Threat

Imported products are ruining the domestic market which come with better quality. Uncertain weather and climate affects the harvest of the sensitive agriculture products. The agriculture technology needed is not affordable for farmers. The fluctuation of agriculture products prices put the farmers in worries.

Conclusions

Indonesian farmers have the advantage of having great amount of land area, huge range of products to plant and great experience to manage their land BUT lack of access to agriculture lending.

Indonesian agriculture has the aims to both to fulfill domestic need and the export need, the opportunity to expand the industry is huge.
As community financial institutions, MFI has to play the role to serve the majority of Indonesian population who rely themselves in agriculture industry (both from financial and technical assistance aspects).

Thank You
tenny.yanutriana@gmail.com