The “Ideal” Concept of Oil Palm Plantation Partnership for Current Era
Indonesia has successfully shifted Malaysia’s position as the world’s largest palm oil producer since 2006. Not only being the largest producer of palm oil, Indonesia has also succeeded in becoming the largest producer of vegetable oil in the world. Indonesia’s successfull becoming a global player cannot be separated from the smallholder farmers.
The latest Palm Oil Statistics show that the area of smallholder farmers reaches 5.8 million hectares or its share of 41% from the total Indonesian oil palm plantations. The achievements made by smallholders were never thought or imagined by world economists in the era before 1980s. This is because in the development of oil palm plantations requires a large investment as well as certain skills and technologies that were not owned by the smallholders at that time.
However, through a partnership program between oil palm plantation companies and the people that initiated by the government has succeeded in bringing people to become one of the important actors in the national palm oil industry. Since the late 1970s, there have been at least four partnership patterns for oil palm plantations, namely Nucleus Estate Smallholders (NES) divided into Special NES and Local NES; Transmigration NES; Members’ Primary Credit Co-operative NES and Plantation Revitalization NES. However, the Plantation Revitalization NES must end in 2014.
Partnership between companies and smallholder farmers is a form of mutualism symbiosis that pareto optimum, which can give benefit for all actors, both farmers, plantation companies and the public community.
In an online discussion that was organized by Media Indonesia, the chairman of the Association of Palm Oil Farmers-Nucleus Estate Smallholders (Asosiasi Petani Kelapa Sawit Perusahaan Inti Rakyat/ASPEKPIR) said that the nucleus-plasma partnership brings great benefits to farmers where plantation companies provide initial facilities for plantation development such as “clean and clear” land legality, high quality production input and technical guidance. Another benefits is that farmers also get market assurance and FFB’s selling price. This partnership has succeeded in bringing farmers to enjoy the “economic cake” from oil palm plantations by increasing income and welfare.
Oil palm plantation companies also get benefit from the partnership program, including ensuring the FFB’s supply. Another benefit felt by the plantation company that was conveyed by GAPKI’s representative in the online discussion held by Media Indonesia, the existence of a partnership by involving the surrounding community is that there is security for this plantation investment from the risk of social conflict. The plasma farmers also have a sense of belonging to the plantation and its facilities, so they will participate in protecting it.
The benefits of the partnership are not only felt by oil palm plantation actors, but also by non-oil palm plantation communities in that area. The development of oil palm plantations has become a regional economic locomotive that attracts other economic sectors such as trade services, financial services, transportation services and other sectors, thus creating a multiplier effect that has implications for regional economic growth. Empirical evidence can be seen from the development of remote areas into new cities as oil palm-based economic centers. The research results also show that the existence of oil palm plantations is proven to have an impact on increasing GDP regional and reducing poverty rate in oil palm central areas.
In order to creating a larger multiplier effect for the Indonesian economy, the partnership on oil palm plantations must be continued. This mandate is contained in Law no. 39 of 2014 concerning Plantation, article 58, relates to the mandatory of plantation companies to facilitate the development of community plantations covering 20 percent of the total area that cultivated under Plantation Business Permits (Izin Usaha Perkebunan/IUP).
According to Dr. Tungkot Sipayung (Director of PASPI) in the online discussion stated that the Plantation Law provides a wide space and variety of partnerships. For example, the form of partnerships between plantation companies and farmers can be done with old pattern (providing production facilities, production processes to processing and marketing), or other variations of partnerships such as ownership of shares company or other support services (transportation services in plantation).
The similar thing was also conveyed by Maria R Nindita, Director of CECT Trisaksti and MM Sustainability, who explained another variation of the partnership, namely the support of oil palm plantation companies as the nucleus for their plasma farmers in terms of improving their welfare, such as health facilities, food security, internet access, farmer’s institution or cooperatives with good governance, and community enterprises.
The various partnership mentioned above can be tailored to the needs of oil palm plantation actors, however, there are important principles that must be maintained by both parties, so that the sustainable partnership can be achieved. Dr. Tungkot Sipayung also mentioned the principle/motto in partnership that must be owned by companies and farmes. These principles must be “win-win conditions” which is divided into four, namely open each other, support each other, cooperate with each other, and mutually benefical.
Chairman of the Indonesian Oil Palm Farmers Association (Asosiasi Petani Kelapa Sawit Indonesia/APKASINDO), Gulat Manurung, also revealed a new concept of partnership that suits for second-generation of farmers that most of them are well-educated. The new concept referred to the equivalent partnership. To achieve that, companies and farmers must implement the principles such as organisational openness, mutually benefical and sharing burdens with others, oil palm company must willing to be audited by and independent audit agency, professionalism and sustainability.
Apart from the important principles that must be upheld in partners, there are important factors that can encourage of a sustainable partnership can be achieved. These factors include depend on each other awareness, the same goodwill and support each other, balanced cooperation, commitment of both parties, trust, fair and mutually beneficial transactions, and good communication.
It is expected, that accommodating these principles and factors will create a more sustainable and inclusive partnership between plantation companies and farmers for both industry players and public society. These partnership can also strengthen the national palm oil industry from negative campaigns and attacks by national and global anti-palm oil parties who intend to inhibit the palm oil in the global market.
Share this article
You may also like these articles