Increasing PSR Fund to Rp 30 Million/Hectar is Good News for Oil Palm Farmers
The people are one of the important actors in the national oil industry. Based on Palm Oil Statistics published by Ditjenbun, the share of farmers reached 41 percent of the total area of Indonesian oil palm plantations. The number of oil palm farmers reached about 2.6 million people and most of them about 2.1 million are independent smallholders.
One of the problems faced by oil palm farmers, especially independent smallholders, is lower productivity. Productivity of smallholders is the lowest compared to state and private oil palm plantations. The use of ilegitim palm oil seed that can be easily and cheaply accessed by independent smallholders and non-optimal technical culture is a factor that causes low productivity in smallholder’s plantations. If this problem continues to be ignored then it will threaten the sustainability of Indonesia’s palm oil supply.
To encourage increasing productivity of smallholder oil palm plantations, the Indonesian government implements replanting programme namely Peremajaan Sawit Rakyat (PSR). Replanting referred replacing oil palm plants that are no longer productive/economical (> 25 years) or low productivity (<10 tons of FFB/ha/year) with superior seeds and the implementation of optimalization technical culture (Good Agriculture Practices/GAP).
To successfull of the PSR’s program, the government also commissioned Badan Pengelola Dana Perkebunan Kelapa Sawit (BPDPKS) to help oil palm farmers by providing PSR grants with a value of Rp. 25 million/hectare. The grant fund is one of the utilization of export levy funds which have been collected from palm oil industry players that have been mandated by the Plantation Law.
In 2020, the Indonesian Government also injected grant funds from the state budget (APBN) allocated for palm oil sector through BPDPKS. The budget provided by the government is in order to realize the commitment to sustainable palm oil in the upstream sector which includes replanting, facilities and infrastructure and also the development of oil palm human resources. The government also decided to increasing PSR grant funds to Rp. 30 Million/hectare. The additional funds are aimed at assisting oil palm farmers in accessing finance, for example citizen’s business loans (read: Kredit Usaha Rakyat/KUR).
As a follow up to the Government’s decision, BPDPKS issued a regulation in the form of BPDPKS President Director Regulation Number: KEP-167/DPKS/2020 dated May 28, 2020 to regulate the increasing of funds for the replanting program. With the issuance of this decision, the increase in the PSR grant funds can be accessed by farmers who want to participate in the replanting program.
Oil palm farmers also immediately withdraw PSR grant funds without requiring the approval from other parties outside the parties to the agreement, where the parties to the agreement in this case are only BPDPKS, partner banks and farmers’ institutions. Beside that, PSR funds that have been collected in escrow accounts can be immediately disbursed and used to develop oil palm plantations without any other funding provisions or associate funds.
The Indonesian Oil Palm Farmers Association (APKASINDO) appreciates the decision of the Government and BPDPKS related to the increase in PSR grant funds. This can be an incentive for farmers to be more active in replanting their crops that are not productive or entered the second generation.
It is expected that by trimming the requirements which have only two requirements namely farmer institutions and land legality; simple and easy procedure because it is only through one verification and can be accessed online; and additional PSR grant funds and credit assistance from various bank, can further increase the interest of farmers to join the PSR program so that the target of 500 thousand hectares of replanted palm plantations can be realized. In this way, the objective of the PSR program which to increase higher productivity of palm oil with sustainable cultivation of oil palm also can be reached.
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