When drought comes on top of the virus…

Indonesia’s farm sector has taken a battering this year. Our local team is helping wherever it can. Rice-growers facing drought were glad to have insurance.  

Extensive restrictions during the pandemic have seriously affected the Indonesian food sector. Agro-economic indicators such as labor absorption, production output, and farm household income have all fallen. IPB University believes that without any economic stimulus, rice production would have shrunk by more than 10% and labor absorption by almost 18%. Farmers are also facing price swings because of an imbalance between demand and distribution.

Fortunately, agriculture has received some stimuli. Financial institutions put together a credit relaxation package worth some $20 billion. A social assistance program provides cash, basic food, and electricity subsidies. Thanks partially to our Foundation, farmers additionally facing weather challenges are benefiting from insurance.

“COVID-19 began to spread here from late February”, explains our Indonesian Country Director Teddy Tambu. “That was bang in the middle of the wet season for rice, our country’s most important crop. But to make matters worse, some regions also faced drought.” Parts of West Java, for example, had too little rain. Drought affected the vital vegetative stage of the crop growth cycle.

Here, however, relief and comfort were quickly available. “Smallholders who had enrolled in our Dana Pandan* program received insurance pay-outs”, explains our Business Development manager Mori Prananto. Dana Pandan also opens farmers the door to agricultural credit. This was particularly important because many micro-finance institutes were refusing fresh loans until business picks up again. “With support from the Foundation and partners, even drought-affected farmers went on to achieve yields of over eight tons per hectare”, comments Mori. “That is considerably better than the national average.”

Now coming into the dry season, ‘our’ farmers across West and East Java continue to enjoy protection through the Foundation’s new partner, Mandiri AXA General Insurance (MAGI). “This protection gives confidence not only to the farmers but also to the banks receiving their credit applications”, notes Teddy Tambu.  

Safe & Sustainable Agricultural Fund

Our Indonesian team is running a varied program of special farmer support during the pandemic. Here is how employees are helping soybean growers and ensuring that farmers stay healthy and well informed.