Farmers offered free land-certification

The Jakarta Post, Jakarta

The government has offered farmers free-of-charge certification for their land as part of a program to help people in rural areas get access to bank loans.

Most farmers have thus far found it extremely difficult to get bank loans even though they have land as collateral because banks accept only certified land as securities, said Sjamsul Arief Rivai, director for natural resources and appropriate technology at the home affairs ministry.

"We therefore decided to get to the root of the problem by assisting farmers who want to borrow from banks, but have never had the legal title certificates for their land," Rivai added.

He was speaking at a seminar here on Tuesday evening where the Yogyakarta Task Force for the Empowerment of Small and Medium- scale enterprises and Cooperatives presented an integrated shrimp farming venture as a pilot project to empower farmers in the southern coastal areas of Java.

Tony Agus Ardie, chief coordinator of the task force, complained at the meeting that local farmers in Yogyakarta and several other districts in Central Java had long faced bureaucratic barriers in their attempts to partake in the program as banks refused to lend to them.

"Banks ask for collateral even before assessing the commercial prospects of the borrower. They simply act like pawnshops," Tony lamented.

Rivai said his directorate had been cooperating with the small enterprises and cooperatives ministry in helping farmers get access to bank loans by obtaining legal land title certificates, which can cost a lot and take a great deal of time to procure when dealing with the government officials in charge of issuing such certificates.

"Only land, with legal title, is accepted by banks as security for loans, but most farmers don't have the money or the technical knowledge to fulfill the procedural requirements for obtaining land title," he added.

The integrated shrimp aquaculture project, which is being developed by PT Indokor Indonesia through its subsidiary PT Indokor Dayamina in Bantul district in cooperation with the Yogyakarta administration and the Gajah Mada University, has been designed as a development initiative for prospective shrimp farmers.

The farmers involved, through a cooperative, have been exporting shrimp to Singapore, Japan and the United States. The program focuses on helping local shrimp farmers and small businesses meet the quality standards required by consumers in developed countries such as the Food and Drug Administration in the U.S.

Shrimp farming has been considered a greatly promising business, especially on the southern coastal areas of Java, which face the Indian Ocean where the seawater is not as polluted as the Java Sea off the northern coast.

The project is helping local farmers and cooperatives by providing them with production input (young shrimp) and technical and marketing services, but the program has been stalled because most farmers have been denied bank loans.

The experience of many other developing countries has indeed shown that strengthening farmers' land rights and easing barriers to land titling (certification) can set in motion a wide range of social and economic benefits for rural people.

A World Bank study last year also concluded that secure land tenure not only provides farmers with incentives to invest in their land, such as building terraces and irrigation, thereby increasing productivity, but also enables them to exchange land rights with less red tape and its associated costs.