An Analysis of Indonesian Farmer’s Financial Literacy

Abstract

The uncertainty of income earned by farmers, namely crop failure with a very high risk, will cause financial problems in their families. The target or respondents of this study are farmers who live in Lahat Regency, South Sumatera. Initial findings indicate that the level of financial inclusion of farmers in the Lahat Regency is still quite low. The purpose of this study is to analyze the level of farmers' financial literacy, identify the components of farmers' financial literacy, and analyze the factors that affect the level of farmers' financial literacy. The research method applied is descriptive analysis and multiple regression. The analysis showed that most of the literate farmers were in the moderately literate category of 47.2 percent and the least of the farmers in the less literate category was 24.5 percent. The financial attitude component gave the largest contribution to the farmers' financial literacy index, which was 0.73. Besides, the factor affecting the level of financial literacy of farmers is education. The policy implication resulting from this research is the existence of a structured promotion and training of financial literacy for farmers by local governments. In addition, campaigning for the importance of being educated and inviting educated people to start running agricultural business activities.