JAKARTA – Partnerships, especially between companies and smallholders, are an important part of the government’s policy in developing oil palm plantations in Indonesia. It is the implementation of the national philosophy of Pancasila, especially its 5th principle (Social Justice for All Indonesian People), and the 1945 Constitution, especially its article 33.
Based on the article, Indonesian natural resources are controlled by the state and utilized as optimally as possible for public welfare and all economic endeavors are thoroughly pursued with the principles of togetherness, kinship, efficiency, justice, sustainability, environmental awareness, independence, and maintaining national economic unity. Through partnerships, corporations (state-owned and private) help the oil palm smallholders to develop and manage oil palm plantations with a view to creating equal economic opportunities and raising public welfare.
The schemes of oil palm plantation partnerships are rooted in the Law No.20/ 2008 on micro, small and medium enterprises and the Law No. 39/ 2014 on Plantations. Previously, the oil palm plantation partnerships were stipulated in the Agriculture Minister’s Decree since 1977.
The basic concept of partnership schemes in oil palm plantations is inspired by the biological cell model, namely having a nucleus and plasma. The cell nucleus is the blueprint and engine of the entire cell growth. In the biological cell system, the cell nucleus will naturally enlarge its plasma so that at a certain time the cell nucleus will divide to form a biological cell (new nucleus-plasma).
Under the partnerships (Nucleus Estate/PIR pattern), corporations’ palm plantations (state-owned and private) act as the core, while the smallholders’ plantations act as plasma. The companies are required to fulfill their duties of developing prospective plasma plantations, preparing and fostering the capabilities of prospective plasma plantations, guiding plasma in maintaining and managing plantations, and accommodating the production from the plasma plantations. With such mechanism, it is expected that there will be a wider replication of the core-plasma plantations.
The development of partnerships in Indonesian oil palm plantations in the form of Nucleus Estate and Smallholders (NES) began in 1977. Following the success of the PIR/NES (I-IV) pilot projects funded by the World Bank, the plantation partnerships were later developed into various PIR models, including:
- Special PIR and Local PIR (1980-1985) which were aimed to improve the local economies;
- Transmigration PIR (1986-1995) which is related to the development of new areas;
- Primary Cooperative Credit PIR for its members (1996) which is linked to the development of rural cooperatives; and
- PIR Partnership Pattern for Plantation Revitalization (2006).
Since 2007, the government has required corporations to allocate at least 20 percent of their total plantation areas for development of small-scale plantations for local people living around their plantations (Agriculture Minister Regulation No.26/ 2007). It is a mandatory for oil palm plantation corporations that have a Plantation Business Permit (IUP or IUP-Cultivation) issued after 2007. The obligation of corporations to facilitate the development of community plantations is also stated in Law No. 39/ 2014 on plantations, especially article 58.
Apparently, the government’s policy on PIR partnerships has been successfully implemented, creating a revolutionary impact in the smallholders’ palm plantations and major triggering effect to the local economies (Sipayung, 2018; PASPI Monitor, 2021ag).
The smallholders’ palm plantation areas increased from only around 6 thousand hectares in 1980 to 6.8 million hectares in 2021. It means the smallholders’ ownership of palm plantations also increased significantly from just 2 percent to around 40 percent of the total palm plantation areas of Indonesia.
Limited availability of new land and the implementation of Presidential Instruction (Inpres) No.5/2019 on moratorium of new palm plantation area licenses are some of the factors that prevent corporations from implementing partnerships through the development of new oil palm plantations for the surrounding communities.
In addition, the opening of new oil palm plantation areas also has the potential to cause environmental problems such as conversion of forests, peatlands and other food/agricultural lands, biodiversity loss, and social problems such as agrarian conflicts and human rights violations. It poses a challenge in implementing the obligation to facilitate the development of smallholders’ plantations. Such condition has demanded alternative partnership models that are more sustainable and inclusive (PASPI Monitor, 2021c).
The alternative models of partnerships to tackle those challenges are accommodated in Law No. 11/2020 on job creation, which is then followed up with technical regulations in government regulation (PP) No.26/ 2021 on the Implementation of the Agricultural Sector, and the Agriculture Minister Regulation No.18/2021 on facilities to develop smallholders’ palm plantations.
Those three regulations still require plantation corporations to facilitate the development of small-scale plantations covering 20 percent of their IUP area. However, the partnership obligation can also be converted into equivalent business activities such as activities in the upstream subsystem, cultivation activity subsystem, downstream subsystem, supporting subsystem, rejuvenation activity facilities, and others.
The history of oil palm plantations described above has proven that partnerships are one of the pillars of the growth of oil palm plantations in Indonesia. Partnerships with various schemes and renewals remain the mainstay of Indonesian oil palm plantations in order to increase productivity, and pursue further down-streaming, and sustainability. (*)
Mitos 7-11 – Kemitraan pada perkebunan kelapa sawit di Indonesia tidak berjalan.
