"The banks are pessimistic about funding the production as they fear that the loan (payments) can be delayed because of the potential (for crop) failure or (the produce) not selling. Therefore, a supply chain ecosystem must be built," Minister of Co-operatives and SMEs Teten Masduki underlined on Tuesday.
During the National Coordination Meeting on the Utilization of Data Collection of Co-operatives and MSMEs 2022, in Nusa Dua, Bali, he informed that the government has started a pilot project in cooperation with industries, including a traditional herbal drink (jamu) producer.
The herbal drink producer is working with co-operatives and farmers growing jamu ingredients such as ginger and turmeric to supply their main materials, which are spices.
Masduki said that the producer needs at least 40 tons of ginger per day, which is supplied by farmers through the co-operatives.
With this scheme, farmers do not need to make direct payments to producers, he added.
"Co-operatives buy (the ingredients) from farmers by paying cash, then the co-operatives send them to the industry so that banks want to finance small farmers because there are price and market certainties," he informed.
He said that the same scheme is being implemented by a horticultural co-operative in Ciwidey, West Java, involving 1,200 farmers who are supplying 8 tons of vegetables to several supermarkets daily.
"That way, farmers can plant according to supermarket demand so that during the harvest, there is no issue of surplus supply which makes the prices fall as they are 100 percent bought by co-operatives," Masduki added.
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