Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
74
Access to savings services differed noticeably in rural and urban areas, however; a smaller
share of those surveyed in rural areas had an account at a bank or other formal financial
institution.
shows sources of credit for rural and urban borrowers in Indonesia as well as in
low- and middle-income countries. Reliance on formal institutions in Indonesia is
relatively low, although consistent with averages across the low- and middle-income
countries. Rural Indonesians have more diverse sources of credit than urban dwellers—
rural households are more likely to obtain credit from an employer or receive store credit.
What sets Indonesia apart from other low- and middle-income countries, however, is the
level of borrowing from friends and family, which is 40–46 percent in Indonesia compared
to about 25 percent on average for low- and middle-income countries.
INCLUDING SMALLHOLDERS IN VALUE CHAINS FOR HEAVILY PROCESSED AGRICULTURAL GOODS: THE EXAMPLE OF OIL
PALM
Many crops must be harvested and processed quickly before their quality declines and
makes them unsuitable for processing. Sugarcane is perhaps the most familiar crop in this
category, but another such crop is oil palm, which produces fruit that contains a kernel
that must be crushed to yield palm kernel oil. Aside from its use as a popular cooking oil,
palm oil can be processed into numerous specialized products used by agribusinesses and
other industries.
Because fresh palm fruit spoils quickly, and because large processing plants are more cost
effective, during the second half of the 20th Century oil palm was often grown on estates,
where the processing facility was surrounded by fields of oil palm owned by the same
FIGURE 45: CREDIT SOURCES IN RURAL AND URBAN INDONESIA AND LOW- AND
MIDDLE-INCOME COUNTRIES
Source: Global Findex (World Bank 2014c).