LKMA Evaluation Formed from PUAP Program in Overcoming Farming Financing in Rural Areas (Case study: Magelang Regency)

Indonesia Center for Agricultural Socio Economic and Policy Studies, Jl. Tentara Pelajar No. 3B Cimanggu Bogor West Java, Indonesia 16161

^* Corresponding author: valicfurca@gmail.com

Abstract

Rural Agribusiness Development (PUAP) is a program to provide capital for smallholder in the agricultural sector. The final goal of this program is to format Agribusiness Micro Credit Institutions (LKMA) in rural. In the implementation 6,887 LKMAs have been formed, including in Magelang Regency. The purpose of this paper is to evaluate the LKMA and its benefit for farmers’ capital fulfillment. The survey was conducted in July 2019 using the FGD method with administrators and interviews with the farmer using a questionnaire. The evaluation focused on the institutional, business, and capital development aspects. The data analyzed through the ranking method to determine the LKMA rank. Of the 9 LKMA, the best LKMA is Ngudi Luhur LKMA, with criteria (i) the institutional aspect is already incorporated, has an office, employees with a fixed monthly salary; (ii) business aspects: saving and loan business carried out based on SOP of financial institutions and (iii) of capital development have reached 3.3 billion. However, loans only cover less than 30% of farmers’ needs due to the limited availability of LKMA capital.

Therefore, it is recommended to assist capital loan assistance to LKMA, which will then be transmitted to farmmers.