To discuss the condition of small farmers' credit in Indonesia, it is important to examine the characteristics of small farmers and farmers' credit itself, as presented below.
80 Characteristics of small farmers in Indonesia
Discussion on small farmers in Indonesia can be divided based on the economic and socio-ecological contexts. In the economic context, the term small farmers is linked with agricultural or rural households, or small-scale rural enterprises, while in respect of social context, the small farmer is correlated to the peasant, who represents subsistence agricultural workers in rural areas.
In the economic context, agricultural households can be divided into two: first, those who claim that their primary income is from agriculture, and second, those who claim that agricultural activities are not the main source of household income. Based on this division, it is found that the percentage of households which have agricultural-based income has declined slightly from 8 1 .7% in 1 984 to 78.5% in 1 993 (Booth, 2004: 23). Thus economically, the current characteristic of Indonesian farmers is that there is a tendency to have off-farm activities rather than an on-farm source of income only (Hansen & Birowo, 1 98 1 : 2)
With regard to the socio-ecological context, Indonesian farmers can be divided into two : swidden farmers and wet-rice farmers. The swidden farmers are those who cultivate dry land, and tend to move from one site to another site based on the ecological conditions of the area. It involves the clearing of forested areas, with the land being allowed to lie fallow for a specific time and be cultivated again with a variety of crops such as dry rice, cassava, maize, yams and so on ( 1 974 cited in Hansen & Birowo, 1 98 1 : 2-3). Although swidden farmers have been seen as subsistence farmers, due to their activities in agriculture being mostly aimed at fulfilling their daily consumption needs, Hudson (Hansen & Birowo, 1 98 1 : 3) asserts that the swidden agriculture could be expanded into commercial agriculture. This is because of the integrated feature of swidden agriculture, which includes cash commodities such as rattan, timber, and rubber. This type of farmer is found particularly in the outer islands, where most of the agricultural land is unirrigated or rainfed, such as Sumatra, Kalimantan, Sulawesi and Irian J aya (Hansen & Birowo, 1 98 1 : 3).
B y contrast to the swidden farmers, there are wet-rice farmers who deal with irrigated agriculture, which is mostly found in Java and Bali. The typical Javanese farmers have
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access to small-size plots which are continuously cultivated with a cropping pattern, whether the land is irrigated (sawah) or unirrigated (tega/an/pekarangan) (Geertz, 1 966: 29).
The socio-ecological characteristic of Indonesian farmers is elaborated further by Clifford Geertz ( 1 966) in his well-known book Agricultural Involution where he describes the ecological approach of Indonesian agriculture. He states that the socio cultural changes in the community are attributable to ecological process. The swidden farmers tend to be integrated to the land, adaptive, and maintain the general structure of the pre-existing natural ecosystem. The sawah farmers, on the other hand, are cultivating lands with artificial and continuous cultivation, with technical and experimental efforts to raise production, and with massive interactions between living organisms and non-living organisms (Apriyantono, 2004; World-Bank, 2005d). In the case of subsistence farmers who follow non-developmental attitudes, Geertz argues that this pattern is the production process of peasant farmers to the existence of what he calls the ethic of "shared poverty".
Credit for small farmers
Focusing on farmers ' income and prosperity is one strategy for future agricultural development (Apriyantono, 2004: 2). The government has stated that agricultural development should be 'people-centred' which focuses on human resources, i.e, the farmers, while the commodity is only a tool to achieve the goal of a higher income and prosperity of the farmers. Therefore farmers should select the commodities which are marketable and profitable in order to be able to compete in the international markets, and therefore raise their income (World-Bank, 2005a: 2).
To achieve these goals, farmers need funds for financing their farming activities. This could come from the government budget to meet farmer credit needs, or from the private sectors and NGOs. The government has committed to achieving this objective by providing credit for small farmers through many programmes and projects such as the BIMAS credit programme, KUT, P4K, KKP, and the most recent one is PMA PMUK, which focuses on empowerment of the agribusiness community through group lending (Mayrowani, Syukur, Sunarsih, Marisa, & Sutopo, 2000: IV- I ).
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Nevertheless, small fanners often encounter many problems in accessing rural credit. Farming activities are highly dependent on uncontrolled factors such as natural disaster and climatic conditions. Small farmers therefore are confronted by high risks when performing farming activities or agribusiness. In many cases they cannot repay a loan promptly due to the irregularity of their earnings, or they cannot provide collateral because of their limited income. Therefore, small farmers need a more flexible credit system, which is easily accessed, regardless of time and place. But this type of credit is very limited, while the demand is increasing (Mayrowani et aI., 2000: R 4, 6). The difficulty of providing collateral, and high transaction costs are the main problems faced by small farmers in attempting to access credit from the formal sector. Research conducted in the three provinces: West Sumatra, West Java, and South Sulawesi, in 2000 reported that collateral is the main requirement that should be fulfilled by the farmer to access credit, and the credit given will be only 60% of the value of the collateral. Furthermore, small farmers are burdened by high transaction costs, on which illegal costs are usually bigger than the legal or official costs (Soentoro, Supriyati, & Erizal, 1 992: 6).