The New Concept of a Palm Oil Mill is the Hope of Smallholder Oil Palm Farmers on the 75th Indonesian Independence Day
Every August 17, Indonesia celebrating its independence day and this year the age of Indonesian independence is exactly 75 years old. If we look at history, Indonesia’s proclaimers and heroes have fought to risk their lives to award independence to all Indonesian people so that they are free from all forms of colonialism and making the lives of all Indonesian people more prosperous. This can be achieved through the fair and sustainable utilization and management of Indonesia’s natural resources.
The palm oil industry is one of the locomotive sectors that drive the rural, regional and national economy, which contributes to realizing the hopes and purposes of the nation to prosper the Indonesian people. In the upstream sector (oil palm plantations), the proportion of smallholder oil palm plantations to total Indonesian oil palm plantations is 41%. Meanwhile, the number of farmers who depend on oil palm plantations in Indonesia reaches 2.6 million people. The data above shows that the oil palm industry is one of the basis of a community economy that has the potential to increase the income and welfare of farmers and society.
When viewed from its characteristics, based on Directorate General of Plantation’s data it shows that only around 476 thousand plasma oil palm farmers have partnered with oil palm plantation companies (nucleus). This means that most of the oil palm farmers in Indonesia, about around 2.1 million people, are independent oil palm farmers in working on their oil palm plantations. The large number of independent oil palm farmers illustrates a fairly revolutionary development in the agricultural sector, especially the plantation sub-sector. This is also considered an achievement because the people independently without facilities/subsidies/credit from the government are able to develop their plantations.
Although the people are important actors in Indonesian oil palm plantations, until now, the management and handling of smallholder oil palm plantations has not been optimal. Smallholder oil palm farmers, especially independent smallholders also face many problems, such as: (a) lower FFB’s price received by independent smallholders oil palm farmers; (b) the long distance between plasma smallholder oil palm plantations and palm oil mill, which has implies high transportation costs and low quality of FFB (high levels of Free Fatty Acids); and (c) the issue of land and plantation business (Surat Tanda Budidaya Perkebunan/STDB) has not been resolved, thus hampering the implementation of the ISPO’s Presidential Decree on independent smallholders palm oil farmer, in Indonesia, and risking to phase-out of them from palm oil industry.
As a solution to the three main problems faced by independent smallholders, an idea emerged to develop a palm oil mill that absorbs the FFB’s independent smallholders palm oil farmers but with a new concept. The new concept in question is that palm oil mill owned by them, will not only process FFB into CPO, but also act as palm oil-based downstream MSMEs that produce processed palm products that have added value with relatively higher economic value.
In the webinar held by the Majalah Sawit Indonesia entitled “Opportunities for the Development of a Mini CPO Plant for MSMEs in Palm Oil”, among the speakers in the webinar were two national palm oil figures, Dr. Donald Siahaan and Sahat Sinaga, who gave theirpoint of views on the development of people’s Palm Oil Factory by adopting a that new concept.
Dr. Donald Siahaan as a IOPRI’s researcher provides an alternative for palm oil mill development that processes independent palm oil farmers’s FFB to produce palm oil-based processed food products such as palm cooking oil, chocolate, margarine, shortening, bread products and palm oil brown sugar. Not only food products, non-food products such as soap, shampoo, cosmetics, skincare can also be developed by these MSMEs.
In line with the previous speakers, Sahat Sinaga who also serves as Chair of the Indonesian Biohidrocarbon Society, also suggested the trend of developing independent smallholder FFB-based palm oil mill that are close to smallholder oil palm plantations that use modern technology to produce high yields, save energy and cost effectiveness. Processed products produced by the palm oil mill must also have high added value such as high quality refined oils, biohydrocarbons or oil from PLTD raw materials.
In line with the discovery of the Red and White Catalyst (Katalis Merah Putih), Sahat Sinaga was also excited to encourage smallholder oil palm farmers to develop palm oil mill to produce biohydrocarbon products (oil palm gasoline, palm diesel). Independent smallholders’ FFB with a characteristic high FFA content is very suitable for use as a raw material for producing palm oil or palm diesel. This means that the development of this biohydrocarbon Palm Oil Factory is able to solve the problems faced by oil palm farmers.
The webinar also received a response from Gulat Manurung (Chairman of APKASINDO) who said that the development of palm oil mill which have by independent oil palm farmers is the dream of farmers to be more independent. At the same time, it is a solution to the potential threat of a phase-out due to the implementation of the ISPO Presidential Regulations, because the palm oil produced by the Palm Oil Factory owned by independent oil palm farmers will be suplied for the domestic market that does not really demand the fulfillment of the sustainability aspect.
The conclusion of the webinar is that the development of independent smallholder palm oil-based palm oil mill is indeed a priority to do, as an effort to create independence and strengthen smallholder palm oil farmers as well as solve problems that have been faced by independent smallholders. It is also suggested to further increase the profitability of the palm oil mill, the resulting output should no longer be CPO/CPKO but already processed products of high economic value. Therefore, collaboration is needed between small palm oil farmers (for example within a radius of 3000 hectares) to create a bankable corporate body to build and operate the MSME industry (palm oil mill and its processed product industry).
Once again, the government and other oil palm stakeholders are expected to immediately start developing a pilot project for the palm oil smallholder MSME industry model with this new concept, so that this innovation can be implemented immediately, not just a discourse. So that it can realize the noble ideals of the nation’s founders, namely to prosper the Indonesian people.
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