Potential for Developing Sharia Financial Products for the Agricultural Sector in Ponorogo
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Binti Masruroh*
Ponorogo Regency, a predominantly agrarian area in East Java, faces significant challenges in agricultural financing. Most small-scale farmers rely on informal lenders due to the inaccessibility of conventional financial institutions, which often impose strict requirements and inflexible schemes. This study explores the potential of Islamic finance as a fair and sustainable alternative for agricultural financing in Ponorogo. Using a qualitative descriptive method, data were collected through literature review, field observations, and in-depth interviews with farmers, BMT/LKMS managers, and Islamic banking representatives. The findings reveal that Islamic financial products such as qardhul hasan, mudharabah, and musyarakah have been positively received by farmers due to their alignment with local socio-religious values and their equitable, non-interest-based mechanisms. However, implementation remains limited due to low Islamic financial literacy, restricted institutional outreach, lack of stakeholder coordination, and the absence of risk mitigation tools such as agricultural takaful. To maximize the potential of Islamic finance, the study recommends improving financial literacy, strengthening BMTs and Islamic cooperatives, developing community-based financing models, and fostering synergy among stakeholders. With proper support and policy alignment, Islamic finance can play a key role in empowering farmers, enhancing food security, and promoting rural economic resilience.
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