Smallholders’ Partnerships Improve CPO Sustainability

JAKARTA – The oil palm plantation fund management board (BPDPKS) has been continually trying to strengthen the partnerships of Indonesian oil palm smallholders through various programs to increase their productivity and sustainability.

BPDPKS Financing Director Edi Wibowo said that his institution has designed a number of programs based on the presidential regulation (Perpres) No.61/2015 and Perpres No.66/ 2018, which are aimed to support the development of human resources, research and development (R&D), promotion and partnerships, replanting, infrastructure and facilities, food needs, downstream palm oil industries, and production and consumption of biofuel from palm oil.

“We hope the implementation of those programs will improve the performances of Indonesian palm oil industries and increase the local absorption of crude palm oil (CPO) at domestic market that will stabilize the CPO price. That means, our CPO domestic market will rise, while our public welfare will increase,” Edi Wibowo said during a palm oil group discussion on “The role of BPDPKS in strengthening the partnerships of Indonesian oil palm growers” in Jakarta recently.

Edi further stated that the program of partnership based on business characteristics will ensure the market for the palm fresh fruit bunches (FFB) produced by independent smallholders, and provide access for them to get quality seedlings and fertilizers.

The partnership programs will also provide technical guidance to increase FFB production, improve FFB quality based on the acceptable standard, implement the good agriculture practices and sustainability principles, increase palm oil value added, and increase the public welfare of oil palm growers.

According to him, regarding partnership in dealing with the Covid-19 pandemic, BPDPKS had sponsored the production of liquid soaps and hand sanitizers as part of efforts to stop the spread of Covid-19 pandemic in regions.

It had also produced virgin oil and derivative products as healthy food and personal care products that are affordable among the general public, and the use of  palm-based batik wax.

“There are also partnership programs to help the production of biofuel from oil palm biomass for growers’ own need and those living in surrounding villages (energy resilience at villages), and utilization of oil palm land sites to grow intercropping plants for their own needs of foods and for people in surrounding villages (food resilience at villages). Then, there is also strategic partnership program for the implementation of replanting at the smallholders’ plantations,” Edi said.

He said that under the strategic partnership program, the smallholders partner with certain companies to provide certified quality seedlings, sustainable cultivation techniques, guarantee of offtakers, and easy financial access and competitiveness,” Edi said.

Addressing the same discussion, the Indonesian Palm Oil Association (Gapki) Executive Director Mukti Sardjono said that actually partnership program in the palm oil industry had been initiated since 1970s when the World Bank provided financial assistance. It was called the nucleus estate smallholders (NES) program, which was then followed with the development of various schemes of  nucleus estate and smallholders for oil palm plantations (PIR).

According to Mukti, the partnership schemes and legal basis until now include the partnership of smallholders with state-owned plantation companies as nucleus estates (NES, Special PIR and Local PIR), partnerships of smallholders with private companies and state-owned companies as nucleus estates that are combined with transmigration programs (PIR-Trans scheme, PIR KKPA), and partnership of replanting for smallholders.

“Based on Indonesia’s palm oil statistic data, the implementation of PIR schemes has led to the increase of oil palm plantation acreage controlled by the smallholders from only 6,175 hectares in 1980 to 5,958,502 hectares in 2019,” said Mukti.

Gapki, said Mukti, has continually supported the partnership programs. “Gapki supports it by, among others, setting up a task force to accelerate the implementation of the replanting program for smallholders. The task force involves all branches of Gapki in palm oil producing provinces. We’re also member of the working group of data improvement and growers’ capacity increase under the economic coordinating ministry,” he said.

“In addition to that, we’re in active coordination for the acceleration of replanting program with the economic coordinating ministry, the agriculture ministry’s plantation directorate general, and BPDPKS, and other related institutions. Gapki, at central office and provincial offices, has  regularly convened meetings to discuss the latest development of replanting program and keep pushing for its acceleration,” said Mukti. (*)

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