Factors affecting coffee farmers’ access to financial institutions: The case of Bandung Regency, Indonesia

The development of coffee plants in Indonesia shows increasingly rapid growth to meet both domestic and foreign needs. However, certain farmers are yet to fully utilize their cultivation technology and market opportunities by employing post-harvest techniques to enhance value addition, primarily because of limited access to farming capital. Therefore, this research aimed to identify the potential sources of farming capital and determinant factors in choosing farming sources. In this experiment, the population of coffee farmers in the Pangalengan Subdistrict was surveyed. The sampling method was a proportional random sampling technique based on 235 respondents. To answer the first objective, descriptive analysis was used, while logit regression analysis was carried out for the second objective. The results showed that most farmers (54.66%) depended on internal capital, while the rest used external capital such as banks (28.39%), non-banks (1.69%), and non-formal financial institutions (15.25%). Characteristics of informal non-financial institutions, especially unsecured loans, include repayment in the form of coffee or money, with repayment terms typically set at harvest time. Conversely, formal institutions offer loans with an interest rate of 9% per annum, requiring collateral in the form of securities, and repayment is typically made on a monthly or quarterly basis. In short, factors influencing farmers in accessing credit from financial institutions are the farmer’s age, number of coffee trees, distance to financial institutions, coffee farming income, education, and credit payment deadlines.