Yogyakarta-Sleman-funding

Yogyakarta-Sleman-funding

JP/17/FARMERS

Rolling fund helps farmers survive crisis, escape poverty

Sri Wahyuni The Jakarta Post Yogyakarta

Although the economic crisis hit the country in July 1997, many farmers are still struggling to rebuild their businesses.

Of some 40 farmers grouped in the Mina Agung farmers group in Kaliduren 3 hamlet, Sumberagung village, Moyudan, Sleman, only one man was initially able to continue farming.

The others, who mostly bred lele (freshwater catfish) and gurame fish, could no longer afford to buy fish food -- which had trebled in price -- while the price of fish rose by only around 10 percent.

Mina chairman Agung Aloysius Tugiman Notohartono (Tugiman) told The Jakarta Post recently that farmers across the region had suffered a similar fate.

Tugiman -- who helped established Mina Agung on June 1, 1993 -- was the only one in the group, and one of a few farmers in the region, who fought to survive, although at that time he had already lost some Rp 60 million of his investment in the business, at a time when US$1 was worth Rp 2,500.

He decided to make his own fish food to sustain the 80 ponds of fish he had been breeding.

Unlike most of his fellow farmers, he said, he could not just let the fish die unfed.

His decision led to his eventual success as the price of fish later trebled due to the limited supply of seafood on the market, thanks to the crisis.

The following year, the Sleman Agriculture and Forestry Office offered him a rolling fund of Rp 10 million to boost the capital of the members of the group he chaired.

He took up the offer and distributed the money to six of the group's members, who had expressed willingness to rebuild their businesses.

In fact, all they needed at that time was working capital, as the fishponds and other infrastructure of their businesses still existed.

The allocation of funds was decided at the group's monthly meeting every Kliwon (Tuesday) evening, according to the Javanese calendar.

In a year, as required, all six farmers were able to repay the loans they had received without incurring interest charges. They did so in two installments.

The first half was paid in the sixth month, while the remainder was paid in the first month of the new year.

The following year another Rp 10 million was offered to the group, for the same purpose and with the same scheme.

By the end of the year, another 10 farmers were saved from bankruptcy.

This process was repeated every year until the present, with more and more farmers receiving financial assistance.

"The (credit) ceiling is now Rp 50 million per year for our group, which comprises 60 members," said Tugiman, adding that the same loan scheme was later applied to all farmers in the regency following the success of the Mina Agung farmers.

"We are the pilot project for the rolling-fund program in Sleman regency," he said.

The Rp 10 million that was initially loaned to them, he said, might sound like a small amount of money in business terms, particularly as it assisted 40 members of the association.

Yet, it was psychologically very meaningful to them, particularly during the crisis.

"We felt we were not left alone in the crisis. The program showed us that the local administration really cared, which gave us the courage to survive," he said.

Speaking to the Post, Sleman Agriculture and Forestry Office head Achmad Yulianto said that the program was aimed at helping villagers, especially farmers, to gain extra income.

"The faith of the farmers is very touching. They do not have access to the banking sector. Unless we give them funding, it is extremely difficult for them to obtain bank loans, which not only impoverishes them but also lowers their spirits, willingness to struggle, bravery, and creativity," Yulianto said.

Initially established using the regental administration's budget of Rp 80 million, the rolling-fund program was first introduced in Sleman in 1998 to the fisheries sector. Preliminary studies and preparation, however, had been carried out from 1996, according to Yulianto, who was then Sleman Fisheries Office head.

When five offices (namely the fisheries, plantation, husbandry, agriculture, and forestry offices) were merged into the agriculture and forestry office in 2001, the program was also extended to the five sectors under the newly established office.

To date, a total of 1,300 farmer groups throughout Sleman have benefited from the program.

The amount of money lent to the farmers has varied from Rp 5 million to Rp 200 million per group. Meanwhile, the current rolling fund total is some Rp 12 billion. All of this has been invested by the community.

"We don't keep the cash in the office. Every time a farmers' group repays an installment, another group is waiting to use it.

"That is how the funds are rolled from one group of farmers to another," said Yulianto, adding that of the Rp 12 billion involved in the funds, less than 1 percent of repayments needed to be rescheduled. The remainder was paid on time.

"Thanks to the program, many of the farmers who initially worked in rented fields now own their own fields," he said.

Speaking separately, Sleman Regent Ibnu Subiyanto said that the way the regency dealt with poverty had received recognition from the Asian Development Bank (ADB).

At a recent meeting held in Manila, the Philippines, attended by representatives of donor recipients, said Ibnu, the ADB said that it was considering making Sleman a pilot project for the rolling-fund program to deal with poverty.

"In a region where poverty is structural, the only way to deal with it is by distributing assets. That is what we are doing through the program -- distributing assets to the people," Ibnu said, adding that the assets also included intangible things such as technical know-how, management skills and general knowledge on the related sectors.

Doing so, he said, would hopefully also create an entry point for them to the banking sector that would, in turn, help boost their future business prospects.