Hybrid financing model for rice agribusiness: comparative evidence from South Sulawesi and Sabah

Abstract

This study develops a context-specific hybrid financing framework for rice agribusiness among smallholder farmers in South Sulawesi (Indonesia) and Sabah (Malaysia) and examines its contribution to financial inclusion. A mixed-methods approach combined survey data from 150 rice farmers with qualitative interviews involving 20 key stakeholders. Descriptive, comparative and thematic analyses were used to examine financing patterns, institutional barriers, farmer preferences and financing challenges. Access to formal finance remains constrained by collateral requirements, high interest rates and bureaucratic procedures. Farmers with financing access reported average productivity approximately 30% higher than non-financed farmers across both study regions. However, given the cross-sectional design, these differences should be interpreted as associations rather than causal relationships. Qualitative findings emphasized the importance of institutional coordination, financial literacy and digital readiness in improving financing accessibility. The study was limited to two rice-producing regions and relied on cross-sectional data. Future research should apply longitudinal or experimental approaches across broader geographical settings. The framework supports financial inclusion and community-based financing for smallholder farmers. This study proposes a context-specific hybrid financing framework integrating public funding, formal finance, Islamic finance, cooperatives and digital financial services within a single conceptual structure for rice agribusiness development.