In the Bima and Dompu districts of West Nusa Tenggara Province, dealing with moneylenders is a plight smallholder corn farmers face on a regular basis. The farmers do not have many options to address their financial problems, especially when they are desperately in need of cash to start preparing their land for planting season and have to purchase fertilizer, or to fulfil their daily needs when they face crop failure in times of drought. Limited access to microfinance services forces farmers to rely heavily on moneylenders, to whom most of their income obtained from their crops goes.
“Just as an example, out of around twenty million rupiah we earned from two hectares of land, almost fifteen million will be spent to repay the debt to moneylenders, while actually we only borrowed eight million,” Agustina, a 32 year-old female farmer, shares about the situation most farmers in her village, Madaprama, Woja Subdistrict, Dompu District, have to manage.
Even though the decision to borrow money is made by both the wife and husband, it is usually the wife who has to seek out loans; and most of the time, quick money can only be accessed from moneylenders.
“Men are often embarrassed to deal with debts. Meanwhile, moneylenders also prefer to have women as their debtors, as it is usually easier to intimidate women to ensure repayment,” explains Rukmini, 45, a female farmer in Mbuju coastal village in Kilo Subdistrict. Consequently, moneylending issues tend to put female farmers in a problematic situation.
Within households women are usually assigned as the main financial managers, which means they have considerable control over financial resources. While this shows the importance given to the woman’s role in the household it also adds to the burden put on her shoulders. In some areas, when corn fails to grow due to drought, women not only have to support their husbands to get more money to replant their farms, but also have to find ways to make sure that their domestic needs are fulfilled. Meanwhile, when their husbands need to move elsewhere to get more income, women are left to care for the family alone.
It is in these farming communities in Dompu and Bima Districts, that the PISAgro Corn Project is supporting smallholder corn farmers with microfinance loans and other bundled services. Through a multi-stakeholder partnership (Bank Andara, Syngenta, BPR Pesisir Akbar, ACA, 8villages and Mercy Corps Indonesia), the project is working to ease the farmers’ burden of managing their mounting debts, and to reduce their dependence on moneylenders for financing their farming activities.
”The 864,000 rupiah interest we now pay on our seasonal loan of 8,000,000 rupiah per hectare, is truly incomparable to the amount we have to pay to all those moneylenders,” Margareta Fatimah, 42, said, highlighting the benefit she gets from participating in the project.
A microfinance loan with a much lower interest rate allows farmers to save more of their income to prepare for the next planting season while it leaves the women with more financial resources to fulfil domestic needs and also to pay education fees for their children. Furthermore, in times when farmers suffer from climatic shocks such as severe droughts, the microfinance loans help farmers bounce back much more easily and replant their farms without worrying about moneylenders.
The stories described above were revealed during a ‘gender and resilience assessment’ undertaken by Mercy Corps Indonesia’s Agri-Fin Mobile Project and BRIGE programs in PISAgro Corn Project locations. BRIGE (Building resilience through the integration of gender and empowerment is a Mercy Corps’ program funded by Margaret A. Cargill which aims to integrate gender and empowerment in resilience programs). The collaborative assessment is a first step towards developing a strategy to incorporate a gender and resilience approaches into the PISAgro Corn project. The objective is for the project to reach more female farmers and to strengthen their capacity to cope with economic and climatic shocks and stresses.
About the writers:
Andi Ikhwan, ￼Indonesia Agriculture and Financial Services Program Director, Mercy Corps Indonesia
Atik Ambarwati, BRIGE Program Officer, Mercy Corps Indonesia
This blog was originally published in PISAgro News, November 2016.