Because of the unpopularity of formal credit programmes in Dilarn, farmers are inclined to accumulate capital through informal finance. Poor farmers tend to create credit systems that are most appropriate and adapted to their conditions to fulfil their credit needs. This is very common in Dilarn where a group of farmers (both men and women farmer groups) have many kinds of credit systems. These informal credit programmes are mainly in the forms of ROSCA (Rotating and Savings Credit Associations) or Julo julo, moneylenders, and simple cooperatives (Simpan Pinjam) .
The julo-julo scheme, which will be elaborated further in this chapter, is the most popular informal source finance in Dilam. People tend to create Julo-julo schemes based on their needs. There are hundreds of julo-julo scheme available in Dilam, but they could not be wholly detected because of the time constraints, which is a limitation of this study.
The Simpan-pinjam, as has been stated above, is different from Julo-julo, since it is specifically created to provide loans for group members. It has a compulsory (basic) saving named as Simpanan Wajib, and is usually paid yearly or monthly. There are also
Simpanan Pokok, or voluntary savings, which are contributed by each member in
Simpan Pinjam. The amount varies, depending on the capacity of each member to save. Every member in the Simpan Pinjam has the privilege of borrowing, with a maximum loan, and interest rates, and other terms and conditions created and agreed by members.
The moneylender is another source of credit available in Dilam. This kind of credit is useful especially in an emergency. Moneylenders usually set up high interest to the borrowers. Moneylenders in Dilarn do not solely give loans in cash. Often, the loan is in the form of fertilisers, pesticides, or seeds. Loans in the form of fertilisers are common in Dilam, and the moneylenders usually are the shop-owners or fertiliser retailers. The repayment is usually in the form of harvests (paddy), and the moneylenders usually take profits through this scheme by taking the difference in value between paddy and
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fertiliser, since the price of paddy was far higher than the price of fertilisers. One farmer complained about this:
I actually do not want to borrow money or in-kind from moneylenders, since they set up high interest rates, and the repayment is usually in the form of paddy (husked rice). But I need to borrow money for fertilisers, otherwise I 'll miss the rainy season and I could not plant on time. The value of this repayment is sometimes very high and does not balance with the price of fertiliser that I borrowed. This is how moneylenders take interest from the farmers (In-depth Interview, 2 1 January, 2004).
The PRA techniques of data collection that were used several times in Dilam were very useful to identify the diversity and advantages of informal credit systems. One PRA technique, which identified the advantages of informal rural credit programmes in terms of economic, social, and cultural points of view was conducted in one farmer's group in Dilam, as presented in Table 6.6.
Table 6.6. Economic, social, and cultural advantages of informal credit systems in Dilam
Types of creditlFinancial institutions Economic Social Cultural
Arisan Ke/ompok Tani (Farmers' Group's
ROSCA): Support DC Enhance SR
-lulo-julo Rp 1 0,00012 weeks Support DC Enhance SR
- 1ulo-julo Rp 5,000/2 weeks Support DC Enhance SR
- 1ulo-julo Rp 2,000/week Support SN Enhance SR
- 1ulo-julo Tikar (carpets)/harvesting time Support SN Enhance SR
- 1ulo-julo Piring (dish) Rp 2,000/week Support DC Enhance SR
- 1ulo-julo Beras (Rice) 1 litre/week Support SN Enhance SR
- 1ulo-julo Alat-alat Dapur (Crockerylkitchen Support DC Enhance SR appliances )/harvesting time
-Simpan pinjam (Cooperatives)
Compulsory savings Rp 1 ,000/week Basic
Arisan Suku (Clan ROSCA):
-Compulsory savings Rp 3000lmonth Support DC Enhance SR Enhance
-lulo-julo Rp 2000/month Support DC Enhance SR Minang-
-incidental contribution Rp 5000 Support SC kabau
Custom
Arisan Tenaga (Alternate Working Together) Support FA/reduce
expenditures
Notes: DC=Dally ConsumptlOns; SN=Secondary Needs; SR=Soclal RelatIonship; SC=Social Capital; FA=Farming Activities. US$ l=Rp 8,500.
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Table 6.6 illustrates the diversity of infonnal finance created by poor fanners in Dilam. It shows that one fanners' group has many kinds of credit schemes or Julo-julo. Despite the small amount of money being used, these activities significantly supported fanners' daily consumptions and secondary needs as well. Sometimes they also used this money for supporting their children's education, or to pay the costs of medicines and health treatments.
In the case of Simpan Pinjam or Simple Rural Cooperatives, according to this group, it was especially useful to support expenditures during Idul Fitri Holiday, when every household prepared more foods and purchased new clothes and household furniture to celebrate this holiday. Thus, fanners do not have to borrow money from moneylenders or relatives to fulfil their needs. The 1 0% interest rates of these simple cooperatives were equally shared among members.
The Arisan Tenaga or Alternate Working Together is significant in helping the fanners to reduce the costs for fanning activities, especially land preparation, planting, and weeding. This refers to the spirit of gotong-royong or working together that has become the tradition of the Minangkabau people. In this Arisan Tenaga, fanners work in turn in one of a member's field. Thus the wages of one fanner to work in every member's fields will be compensated when other members work in his field. With regard to Arisan Suku
or Clan ROSCA, it has economic, social and cultural advantages. As has been shown in Table 6.4 and Table 6.5, Arisan Suku is mostly preferred by Dilam people. This type of
Arisan will be discussed further in the next section.
"Arisan Suku" : Cultural Influence of Rural Credit Programme
Arisan Suku or Clan ROSCA is one of the infonnal rural credit programmes in Dilam. The unique feature of this rural credit programme is that it is influenced by the well known Minangkabau customs of the matrilineal system 1 . The procedure of Arisan Suku
I )