Oil Palm Smallholder Receive KUR Specialized For Replanting Fund
Oil palm is a superior commodity for Indonesia which has a major contribution to the economic, social, and ecology aspects. As the largest palm oil producer country in the world, Indonesian palm oil industry also faced problems. One of the problems is the low productivity of smallholder oil palm plantations.
Based on the Palm Oil Statistics data, the level of smallholder plantation productivity is the lowest when compared to state and private plantations. The low productivity of smallholder oil palm plantations is caused by various factors such as the use of less superior seeds (ilegitim), the lack of knowledge of farmers in technical culture, and the age of oil palm trees, which on average have entered the age more than 20-25 years. Therefore, increasing the productivity of smallholder plantation is the main strategy to maintain the sustainability of the existence of the national palm oil industry in the future, given that the moratorium on new oil palm plantation is still enforced today.
To encourage increased productivity of smallholder plantation, the Indonesian government created the Smallholder Palm Oil Replanting (PSR) program. The purpose of the PSR program is not only to increase productivity but this program is considered as an important momentum for smallholders to advance and be transformed for the better. Through the PSR, smallholder uses superior seeds and apply technical cultivation following Good Agricultural Practices (GAP) so that productivity levels are equivalent to company-owned plantations.
However, since its launch in 2016, the realization of PSR is only about 196 thousand hectares, far from the target of 180 thousand hectares per year. The realization in 2020 also only covers 94 thousand hectares or around 52 percent of the target. Therefore, accelerating the PSR has become the focus of government policy to increase the area of PSR land. The strategies for accelerating carried out by the Indonesian government include simplification of requirements, specifically from 8 requirements to only 2 conditions, namely institutional planters and land legality with easy procedures and additional BPDPKS grants from IDR 25 million per hectare to IDR 30 million per hectare.
Although the PSR grant funds that can be obtained by smallholders have increased, there are still other financial factors that are considered to be resistance to the implementation of PSR, namely the absence of further assistance funds. The PSR grant is only sufficient to be used as an investment fund in the initial year for felling old crops to land preparation and planting new oil palm seedlings (P-0). Meanwhile, funding sources for technical culture and maintenance in years 1 to 3 (P1 – P3) are not available.
To accelerate the PSR, the government again issued a regulation as a solution to the problem of further assistance funds. The Ministry of Agriculture issued Regulation of the Minister of Agriculture Number 3 of 2021 concerning Facilitation of the Implementation of microcredit program (KUR) in the Agricultural Sector, where the KUR scheme can increase and expand access to oil palm smallholders to cover the gap in the shortage of grant funds from BPDPKS as a source of financing for oil palm replanting.
As regulated in Article 20 paragraph 3 states that oil palm smallholder farmers who participate in the PSR program and receive funds from BPDPKS can participate in the KUR Specialized scheme. The maximum loan in this scheme is IDR 500 million with an interest rate is 6 percent per year. The term of special KUR is a maximum of 4 years for working capital financing loans, meanwhile, investment financing with a grace period maximum of 5 years.
In the discussion on the Roadmap for the National Palm Oil Industry Towards 2045 which was held in 2019, three of the State-Owned Banks are BRI, BNI, and Mandiri said that they had provided a KUR Specialized as financing scheme that could be accessed for financing oil palm plantations with a plafond value of IDR 500 million and interest rate is 7 percent per year. When compared with the new regulations, it shows that the loan amount on a KUR Specialized that can be accessed by oil palm smallholder is still the same but the interest rate is lower.
Dr. Purwadi, Director of the Oil Palm Science Center of Instiper responded to the policy by saying that this KUR Specialized as financing assistance can help oil palm smallholders to implement best practices (GAP) as well as to obtain sustainable certification (ISPO). Although the ideal period of investment financing should be 9 years with a grace period of 3 years, this regulation of the Ministry of Agriculture still helps farmers and encourages farmers to be more enthusiastic about paying off credit within 5 years or can still be extended within 7 years.
With the issuance of this regulation, it is hoped that it can become a new spirit for oil palm smallholders to participate in the PSR program so that the PSR target can be achieved. A further implication is that smallholder oil palm plantations will be of higher quality and sustainability so that the existence of the national palm oil industry in the global market will be maintained.
Share this article
You may also like these articles