JAKARTA – Palm oil companies and smallholders should further strengthen their partnerships, which are the key factor in maintaining palm oil supply chain and increasing sustainability and competitiveness at the global market.
Synergistic partnership between the corporations and smallholders can be strengthened through the improvement of institutions of smallholders by applying the principles of transparency and good governance.
The Indonesian Palm Oil Association (Gapki) Deputy Chairman in charge of organization affairs, Kacuk Sumarto said that the palm oil supply chain is inseparable from the relationship of palm oil companies and smallholders. If there is any problem in the supply chain then it will certainly affect the sustainability of the palm oil industry. “The partnership between smallholders and palm oil companies should be always solid and effective. There shouldn’t be any misunderstandings between them, as it could endanger the palm oil industry,” he said.
The government has stipulated such partnership through the agriculture ministry regulation (Permentan) No.1/2018 on guidelines to determine the price of fresh fruit bunches (FFB) produced by smallholders every month based on provincial regulations in respective provinces. The regulation applies for smallholders under the plasma scheme or those independent from any scheme. The smallholders are required to partner with palm oil mills.
The regulation stipulates that partnerships between the smallholders and palm oil companies should be based on the principles of mutual benefits, mutual needs, and sustainability. Usually, the conflicts between the palm oil companies and smallholders are triggered from the calculations of FFB prices. To avoid the conflicts, both sides should be transparent. And they need to always realize that their business has certain characteristics, which include the important of ensuring the FFB gets quick processing at the palm oil mills to ensure getting better quality of crude palm oil (CPO) and palm kernel oil (PKO).
By considering all of the characteristics of the palm oil businesses, the government has issued regulations, which include a stipulation on the establishment of an institutionalized partnership under what is called the nucleus estate and smallholders project (PIR), which then becomes a reference for establishing various schemes of partnerships between the companies and smallholders in line with their needs.
Historically, the oil palm partnership schemes are categorized into three phases, namely initiation, implementation, and development or expansion of their partnership schemes.
This year, Gapki focuses on strengthening the partnerships and it will maximize the utilization of smallholders’ potential and reduce misunderstandings regarding the calculation of FFB prices. The Covid-19 vaccination in 2021 is expected to revive the national economy, which will then revive the national palm oil industry. “For such development, the partnership is needed. Strengthening the partnership is the priority program of Gapki this year. We will keep monitoring its progress on ground,” he told the participants of virtual Ngobrol Bareng Gapki recently.
The Sustainable and Strategic Plantations Development Forum Chairman Achmad Mangga Barani said during the virtual discussion that the partnerships between palm oil companies and smallholders should be based on equality, harmony, and cooperation to improve partnerships.
“There have been many partnerships already implemented in the palm oil industry. They include various types of PIR, sales and purchase of FFB, cooperation to develop smallholding plantations, and replanting of smallholding plantations. Realizing the strong partnership between the companies and smallholders needs the role of the central government and regional governments, and the business competition supervision commission (KPPU) to supervise the business competition in the palm oil industry,” he concluded. (*)
Source: Investor Daily
