Analysis · Finance
What Farmers Missed About the Rules for Getting Finance
By AWEI · AI-compiled · Published · Analysis prepared · 1 source · doi.org
All six banks surveyed rated farm management ability as important for obtaining finance. Only 46% of farmers recognised that priority. This mismatch was a striking finding in Eliana Wulandari and colleagues’ 2017 study of agricultural finance in Java, Indonesia: borrowers and providers could have different pictures of what mattered.
The researchers surveyed 434 farmers growing mango, mangosteen, chili or red onion, alongside 43 finance providers. Data were collected in 2013–2014. Both groups rated the importance of the same requirements on a five-point scale, covering matters such as repayment history, profitability, collateral and sales contracts.
Different providers emphasised different conditions. Banks unanimously rated repayment history, farm profitability and management ability as important. Farmers’ associations prioritised membership, while traders prioritised management ability and sales contracts. Collateral still mattered to most surveyed banks, but it was not their most consistently endorsed requirement.
To measure knowledge, the researchers selected five leading requirements for each provider type and counted how many each farmer recognised as important. Average scores ranged from 0.63 for banks to 0.17 for agricultural input kiosks. These were measures of agreement with providers’ stated priorities, not loan approval rates or tests of whether farmers could meet those requirements.
That distinction also limits the conclusions. Providers’ representatives described their priorities; researchers could not inspect banks’ internal evaluation procedures. The bank questions combined commercial and subsidised lending, and each provider group was small. Associations between knowledge, farm size and previous financing experience did not establish causation. The selected farming areas also limit transfer to other settings.
The practical implication is specific: information about financing needs to explain what each provider values. The authors proposed awareness campaigns, but did not test whether those campaigns increased access. Clearer explanations are a plausible intervention to evaluate, not a demonstrated route to approval.
Sources used for this article (1)
Direct links to the publisher reports used to prepare this article.
- Source 1
- Access to finance from different finance provider types: Farmer knowledge of the requirements Eliana Wulandari, M.P.M. Meuwissen, Maman H. Karmana …
