REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI) and Ministry of Agriculture launch cattle insurance to reduce farmers' risk. The insurance policy provides assurance to the owner, if his cattle experiences risk of death, injury, birth of calf or lost.
"Without the availabilty of insurance that can reduce credit risk, banks still wary to give loan to farmers," Deputy Governor of BI, Halim Alamsyah said on Wednesday.
Credit of agricultural sector in Indonesia is still small. Based on BI's data, it is only 158.5 trillion IDR until August 2013, including loan to livestock sub-sector worth 11.7 trillion IDR or only 7.35 percent. On the other hand, credit to micro, small and medium enterprises (SMEs) in agricultural sector reached 6.5 trillion or 14.95 percent in similar period.
Cattle insurance has had license from Financial Services Authority (OJK). Cattle Insurance Consortium (KATS) has been formed which would offer cattle insurance products in Indonesia. KATS is chaired by PT Asuransi Jasa Indonesia, a state-owned company operating in general insurance. The members are PT Asuransi Umum Bumiputera Muda 1967, PT Asuransi Tri Pakarta and PT Asuransi Raya.
Deputy Minister of Agriculture, Rusman Heriawan hopes that this system can be a solution to develop livestock sector. Government will conduct a counseling session, because farmers need to close to other financing sources, including bank credit facility.
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