Unlocking credit access for farmers (Case study of dairy farmers in East Java, Indonesia)

Abstract

Access to credit is crucial for the economic development and sustainability of smallholder farmers in rural areas. In the context of Malang, East Java, Indonesia, this study delves into the factors that influence smallholder farmers' access to credit. Smallholder farmers play a pivotal role in ensuring food security, agricultural, and livestock productivity in Indonesia, making it imperative to understand the determinants of their credit access. This research was conducted between July and August 2023, employing a Probit Model and descriptive statistics to analyze data collected through a survey questionnaire. A multistage random sampling technique was employed, encompassing 70 smallholder dairy farmers in Malang. Findings from the Probit Model unveiled that several factors significantly affect the decision of smallholder farmers to adopt credit access. These factors include education levels among farmers, cattle ownership, access to the internet, participation in livestock training programs, and the employment of family members. The positive influence of these factors emphasizes the importance of targeted interventions to enhance smallholder farmers' credit access. To promote the adoption of credit access among smallholder dairy farmers in Malang, collaborative efforts between stakeholders and government entities are essential. These efforts should focus on improving the availability of livestock-related training programs and enhancing internet accessibility, particularly to bolster the sustainability of the livestock sector, with a specific emphasis on dairy farming. Such measures can help uplift the livelihoods of smallholder farmers, foster agricultural growth, and contribute to overall rural development in the region.