"It is necessary to minimize the risks of livestock farming through insurance," said BI`s Deputy Governor Halim Alamsyah here on Wednesday.
Alamsyah noted that high risk is a characteristic of farming, particularly in raising and breeding livestock, since disease and death can lead to major losses. As a result, cattle farmers receive low credit from the banking industry.
The cattle insurance scheme was launched by awarding the policy to 10 cattle farmers from the Warga Mulya Cooperative, Sleman, Yogyakarta, and from the Boyolali Cattle Farmers Association, Central Java.
This insurance policy will cover losses from cattle deaths caused by disease and accidents caused by errors in the breeding process; it also covers losses from stolen cattle.
The cattle insurance scheme has been recognized by the Financial Services Authority that appointed the Cattle Farming Insurance Consortium as its marketer in Indonesia.
The Cattle Farming Insurance Consortium is chaired by PT Asuransi Jasa Indonesia (Persero), and the members are PT Asuransi Umum Bumiputera Muda 1967, PT Asuransi Tri Pakarta, and PT Asuransi Raya.
The premium payment can be taken directly from the farmers, as credit from a bank, as funds from a partnership with other organizations, or as a government subsidy.
According to BI`s Communications Department`s Executive Director Difi A. Johansyah, the implementation of the cattle insurance scheme is one of the items listed on the Memorandum of Understanding signed by BI and the Agriculture Ministry in 2011, aiming to increase access to financial resources for the agricultural sector.
BI has also put meat on the priority list for food security because of its high contribution to the inflation rate and the fact that it is one of Indonesia`s main imports.
Based on the BI`s data, in August 2013, the agricultural credit distribution offered by commercial banks reached Rp158.5 trillion, including Rp11.7 trillion, or 7.35 percent, given to the livestock farming sub-sector.
Meanwhile, the credit distribution to agricultural micro, small, and medium enterprises reached Rp43.73 trillion, including Rp6.5 trillion for the livestock farming sub-sector, or 14.95 percent.(*)