Alternative Partnership of Oil Palm Plantation Company-Farmers to Accelerate Replanting Program (PSR)
The achievements of the Indonesian palm oil industry is pretty revolutionary cannot be separated from the partnership policy undertaken by the government since the late 1970s. State-owned (PTPN) and private plantation companies collaborating with farmers have succeeded in making Indonesia as the largest palm oil producer in the world. This is confirmed by USDA states that Indonesia’s share of palm oil production in 2020 reached 57.7 percent of total palm oil production.
With this achievement, the Indonesian Government took the initiative to continue the partnership policy in order to maintain and improve the existence of our palm oil industry in the global market. This initiative is stipulated in Law no. 39 of 2014 concerning Plantation, article 58 where companies are required to allocate 20 percent of Plantation Business Licensing (IUP) for facilitating of community oil palm plantations (plasma).
However, the implementation of this Law faces various obstacles such as the limited area of new plantations, the enactment of the Moratorium Presidential Instruction (Inpres 8/2018) and the embodiment of sustainable principles (ISPO / RSPO) in palm oil production which may not lead to the conversion of forest or agricultural land, biodiversity loss and social conflict. These obstacles have affected oil palm plantation companies to carry out their partnership obligations.
Seeing the challenges that are faced by plantation companies in partnership development, it is necessary to have a new alternative pattern of partnership between plantation companies and farmers. In addition, the partnership pattern should also be solution to the problems faced by farmers, especially independent smallholders who are scattered around their plantation areas. One of the alternative partnerships that can be developed is the role of plantation companies in facilitating the acceleration of the Farmers Replantation Program (PSR).
PSR is a national program to increase the productivity of farmer’s plantation and also as momentum for them to upgrade and be equal to other oil palm plantation actors. However, the realization of PSR has still not reached the target even though the requirements have been simplified and the grants have been added as incentives. The realization of PSR in 2020 has only reached 94,033 hectares or around 52 percent of the target is 180 thousand hectares.
The development of partnerships is considered to be a “toll road” to accelerate the realization of PSR. From Warta Ekonomi, GAPKI Vice Chairman I, Kacuk Sumarta, explained the process partnership between plantation companies and farmers in the PSR scheme from the formation of institutions, verification of CP-CL (recipient candidate, locations candidate) to technical recommendations and agreements of three parties (working together, coordinating with the local plantation agency/Disbun), and then followed with the process of felling, cultivating the land, planting, maintaining until harvesting, and buying fruit. This partnership in PSR scheme could be all or part of that process.
In the webinar held by GAPKI (23/2) with topic about partnerships, one of the speakers was Hidro Ariantes, Secretary of the Koperasi Swadaya Mas Bersama Siak Regency, Riau Province, explained the urgency of partnerships between farmers and plantation companies in implementing the PSR.
Some points of the urgency of the partnership using point of view of oil palm farmers, they are plantation company can provide financial support (loans) in the initial preparation of the PSR program such as the fee for changing names in land certificate and other costs that are quite burdensome for farmers; (2) the company can provide knowledge to farmers regarding how to cultivate plantation based on Good Agricultural Practices (GAP), including the use of superior seeds and using of mechanization which implies more efficient production costs; (3) companies can also represent as guarantor trusted by lending banks; and (4) companies can facilitate farmers for budgeting or cash flow projections.
Besides that, oil palm farmers will also get a benefit from this partnership related of guaranteed market access because the plantation company has ISPO/RSPO certification and guarantees price that follows the price formulation of the Provincial Plantation Agency. This speakers also emphasized that oil palm farmers have nothing to loss by partenering with transparent and accountable plantation companies.
The implementation of the partnership with the aim to accelerating the realization of the PSR requires collaboration and coordination between relevant stakeholders such as GAPKI as an association of oil palm plantation companies in Indonesia, the Directorate General of Plantations and the Regional Plantation Agency, oil palm farmers (farmer groups), and BPDPKS.
One of the real actions in developing partnerships between companies and farmers in the PSR scheme was carried out by GAPKI North Sumatra, which succeeded in becoming a “matchmaker” for Sehati Farmer Group with the Sumber Tani Agung (STA) Company.
It is hoped that more partnerships will be formed because this pattern is considered beneficial for oil palm farmers who can join the PSR program and also profitable for oil palm plantation companies that can complete their obligations to build plasma plantations and optimize utilization of palm oil mill by accommodating farmer’s FFB yields. Not only that, the implementation of this partnership pattern is also a new hope for maintaining the existence and sustainability of the national palm oil industry in the future.
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