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Ifad grants Indonesia its biggest development loan in fund’s history

Post a commentBy RJ Whitehead , 17-Feb-2017

Ifad grants Indonesia its biggest development loan in fund’s history

The International Fund for Agricultural Development (Ifad) has signed an agreement with Indonesia’s government to launch the biggest project in the fund’s 40-year history.

Ifad’s US$98.5m loan and US$1.5m grant will fund a rural development project in the country that will greatly improve access to water for irrigation for up to 24m smallholder farmers. US$600m of the US$853m project will be financed by the Asian Development Bank.

With declining rural infrastructure, diminished access to land, and high transport and logistics costs, Indonesian smallholder farmers are facing a number of challenges. They also suffer from difficulty in reaching markets, and vulnerability to erratic weather patterns and lack of rainfall due to a changing climate.

Indonesia has set ambitious targets related to food security and inclusive development in rural areas. This investment will contribute greatly towards supporting Indonesia to achieve its goals,” said Ron Hartman, Ifad’s country director. 

By establishing a policy that allows smallholder farmers to help design and manage large investments in irrigated agriculture, there will be stronger and more sustainable results."

It is hoped that the project will improve farm productivity by providing a range of support options that include knowledge sharing between farmers and better storage and access to high-quality seeds. 

It will also establish better access to financial services, prioritise innovation in local value chains and encourage partnerships with private suppliers of agricultural inputs. Farmers will be in charge of managing the irrigation systems to ensure that access to water is  equitable and that maintenance costs and responsibilities are shared.

In the first phase, the project will cover 16 provinces in Sumatra, Java, Kalimantan, Sulawesi and Nusa Tenggara, with approximately 1,800 irrigation schemes covering a total area of almost 2m hectares.

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