Financing Status in the Cocoa Agribusiness Value Chain in Southeast Sulawesi

Haji Saediman

doi:10.59890/ijsas.v4i1.296

Authors

Haji Saediman Halu Oleo University, Kendari

DOI:

https://doi.org/10.59890/ijsas.v4i1.296

Keywords:

Cocoa, Credit, Financing, Smallholder Farmers, Value Chain

Abstract

Access to finance is critical for developing agribusiness value chains, yet smallholder cocoa farmers face persistent financing constraints. This study assesses the current financing status along the cocoa agribusiness value chain in Southeast Sulawesi, Indonesia, highlighting the distribution of credit across upstream (on-farm) and downstream (trading/processing) segments. The research was conducted in Kolaka and Konawe districts using surveys, interviews, and focus group discussions with cocoa farmers, input suppliers, traders, processors, financial institutions, and government officials. Results indicate that on-farm cocoa production is predominantly financed through informal value chain-based arrangements, especially credit advances from village collectors and larger traders, while formal financial institutions concentrate lending on downstream actors. Smallholder farmers have limited direct access to bank credit due to collateral requirements, risk perceptions, and procedural barriers, and instead rely on traders’ credit or family loans. Conversely, traders utilize bank loans to fund purchasing capital and in turn extend informal credit to farmers as a strategy to secure cocoa supply. Key recommendations include strengthening rural financial infrastructure, developing tailored credit products, expanding credit guarantee and insurance schemes for agriculture, and fostering linkages between formal lenders and farmer/trader networks.

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