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US$56 Million Agricultural Loan to Assist Poor Indonesian Farmers

MANILA, PHILIPPINES (15 August 2002) - The Asian Development Bank (ADB) today approved a US$56 million loan to Indonesia that will help to raise 400,000 households above the poverty level. The loan will support a project to assist poor farmers to increase their incomes and take better advantage of market opportunities.

The project will help 2.75 million poor people in five districts that have a combined poverty rate of 66 percent, about twice the national average. It will empower poor farmers in 1,000 villages to adopt innovative agricultural production and marketing methods, and make village-level public investments suited to local needs. It will also give farmers access to information about technologies, and reorient ongoing agricultural research to focus on meeting the needs of marginal farmers in rainfed areas.

Nongovernment organizations (NGOs), working closely with government agencies and the private sector, will help the villagers to organize into farmer groups, identify innovations to meet their needs, and propose the public investments required to introduce the innovations. Women will be actively involved in the planning of village investments.

The project will set up directly elected village project investment committees (VPICs) and inter-village forums, and district coordination committees to approve, implement, and monitor the investments. The project will provide grants of up to US$30,000 per village, to be administered by beneficiaries themselves, to implement approved investments.

"We are initiating closer NGO and community participation for better project impact," says Mandar Jayawant, ADB Rural Development Specialist. "With their new access to technologies and information, farmers will be empowered to undertake simple investments at the village level."

The project will develop national and district-level information networks useful to farmers and improve the dissemination of information at all levels.

The total cost of the project is US$70.92 million. The ADB loan will come from its Asian Development Fund and will have a term of 32 years, including a grace period of eight years, with an interest charge of one percent per annum during the grace period and 1.5 per cent thereafter. The Agency for Agricultural Research and Development of the Indonesian Ministry of Agriculture will be the project's executing agency.

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