Publication: An Exploratory Overview of Agriculture Finance in Indonesia
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Date
2020-06-19
ISSN
Published
2020-06-19
Author(s)
World Bank
Abstract
The Government of Indonesia is aiming to
diversify the country’s food system by developing and
strengthening high-value-added and more nutrient-rich value
chains. In this regard, the government is focusing on
diversifying into horticulture and small ruminant livestock.
Undertaking Value Chain Analysis (VCA) is a critical part of
this process as it helps in the identification of
constraints and opportunities in relevant sectors.
Agriculture funding and finance are vital components of this
analytical process. This report presents a preliminary
overview of opportunities and constraints as well as areas
for future interventions. The analysis is based on a World
Bank and FAO scoping mission to Indonesia that took place
between March 2 - March 13, 2020. This report focuses on the
supply-side of capital. The key findings suggest that
supply-side constraints are minimal. The liquidity in
Indonesia’s banking system is enough and there already exist
extensive physical banking networks within the country. The
Indonesian banking networks include a selection of
commercial and specialized banks, membership-based groups,
and fintech organizations. Also, there exist several large
food manufacturers that could potentially aid in the process
of financing and the creation of linkages through vertical
integration of value chains. The Small and Medium Size
Enterprises (SMEs) in the food and agriculture sectors have
been growing strongly, and they can act as accelerators and
facilitate the process. The Indonesian government is
supporting the development of value chains and has been
actively promoting the creation of farmer organizations to
aid the process. Lastly, there exists a demand for the
creation of a blended finance facility that could help
amplify the effects of the value chain projects, and the
Tropical Landscapes Finance Facility (TLFF) is a proof of
such a concept that is working well in Indonesia.
Link to Data Set
Citation
“World Bank. 2020. An Exploratory Overview of Agriculture Finance in Indonesia. © World Bank, Washington, DC. http://hdl.handle.net/10986/34100 License: CC BY 3.0 IGO.”