Loan Repayment Behaviour Among the Rubber Farmers in Nesi Project in East Aceh, Indonesia
As an effort to promote the national rubber industry, the government of Indonesia in the past has implemented various policies and programmes. One of them is the Nucleus Estate and Smallholders I Project (NES). The NES I project was officially introduced in 1977 as a pilot project in implementin...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English English |
| Published: |
1999
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/8253/1/FEP_1999_9.pdf |
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| Summary: | As an effort to promote the national rubber industry, the government of
Indonesia in the past has implemented various policies and programmes.
One of them is the Nucleus Estate and Smallholders I Project (NES). The
NES I project was officially introduced in 1977 as a pilot project in
implementing the contract farming system in Indonesia, and it has
progressively developed ever since. It involved a total area of about 5,852
hectares and 2,926 farmers. However, the project faced one major problem,
that is poor loan collection where quite a Significant number of farmers
involved in the project who were not able to repay the loan on time.
According to the Pusat Pengkajian dan Pengembangan Agribisnis
(1994), the total amount of loans that had been disbursed by the NES
project was RP 12.690 billion and out of this amount only R P 6.533 billion or
about 51 percent had been repaid by the project participants.Recognition the above problem, the general objective of the study is to
examine the loan repayment performance of a contract farming system
through the NES I Project in East Aceh, Indonesia. The specific objectives of
the study are to assess the performance of the non-defaulters and the
defaulters in terms of their productivity, income and adoption of technology;
and to identify key factors influencing borrowers of NES I project to repay
their loans.
This study was conducted at the NES I project, which is located at
about 89 km from Langsa in East Aceh District of Aceh Province, Indonesia,
and adjacent to the State-Owned Enterprise, i.e., PT. Perkebunan Nusantara
I. For the purpose of this study, one hundred respondents were chosen as
the sample of the study which consisted of 65 non-defaulters and 35
defaulters.
The study shows that, with the exception of the tapping frequency,
there is no significant difference between the non-defaulters and the
defaulters in terms of some of the economic variables such as level of
productivity, income level and adoption of technology.
The analysis of logit model which provides 81 percent of correct
prediction indicates that, with the exception of the farmers' income level, the signs of the estimated coefficients of other explanatory variables are as
expected according to a priori reasoning. Generally, the model indicates that
the probability that a farmer will become a non-defaulter is positively related
to educational attainment, farming experience, productivity, other sources of
income, attitude towards loan repayment, knowledge about the rubber
technology and satisfaction with the NES I project activities and services, but
negatively related to age, family size and income. However, only the
coefficients of educational attainment, family size and knowledge about the
rubber technology are found to be significant at the 5 percent level. |
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