Indonesia is now encouraging the downstreaming of plantations by strengthening partnerships between farmers, the private sector and the government to support the sustainability of the Indonesian palm oil sector.
This can be done with a plasma oil palm plantation program where large oil palm companies provide 20 percent of their total Cultivation Rights (HGU) to be managed by local communities.
One of Wilmar Group's subsidiaries, PT Perkebunan Milano signed amemorandum of understanding (MoU) for the Partnership Farming Program with Seira Mandiri Jaya Producer Cooperative in Sei Rakyat Village, Labuhanbatu Regency, North Sumatra.
This program is a form of the company's commitment to support the improvement of the welfare of farmers around its operational areas.
Under the agreement, PT Perkebunan Milano will provide support to cooperative members in the form of technical guidance, access to capital, and guaranteed marketing of crops. Through this partnership, the community gets the opportunity to manage plasma plantations in a better and more sustainable manner.
Edi Saputra, Chairman of the Seira Mandiri Jaya Producer Cooperative, expressed his hope that this MoU can increase the productivity of farmers' oil palm fresh fruit bunches (FFB), which currently averages around 700 kg per hectare (ha) per year.
The low productivity is due to the use of uncertified seeds and fertilization practices that are not up to standard.
"Farmers have indeed planted oil palm, but it is still sober because we only know how to plant. With this MoU, we hope that productivity can approach company standards," Edi said in a press release received by SUAR in Jakarta.
In the initial stage, the plasma partnership program will cover approximately 71 ha, and will be further expanded to 115 ha. The program will be followed by 38 cooperative member farmers.
"With this assistance, we are optimistic that we can achieve better welfare," he said.
Real contribution
The Head of the Labuhanbatu Regency Agriculture Office, Agussalim Ritonga, appreciates the commitment of companies that have complied with regulations related to plasma formation. He assessed that the program will make a real contribution to farmers and the regional economy.
"We really appreciate it, because this program will have a considerable impact on improving the economy in the region," he said.
The Maju Jaya Oil Palm Plantation Village Unit Cooperative (KUD), a plasma of PT Buluh Cawang Plantation, Wilmar Group managed to conduct the first harvest of oil palm replanting results in only 30-33 months after planting, or faster than the initial prediction of 36 months.
Chairman of KUD Maju Jaya I Ketut Sana said the replanting process began in 2019 and the first planting was carried out in April 2020.
The faster harvesting is due to good cooperation between plasma cooperatives and the company coupled with the application of good agriculture practices (GAP), in the form of the use of superior seeds, the right time and dosage of fertilizers, plantation extension workers, and pest control.
He explained that the harvest was not carried out simultaneously because the replanting was carried out gradually in several batches and it is estimated that next month the farmers will have completely harvested.
The total oil palm land area of KUD members is currently 600 hectares (ha) managed by around 300 plasma farmers.
Previously, the oil palm productivity of KUD members was only 14 tons per ha per year. With these superior seeds, he said, the productivity is estimated to have the potential to reach up to 30 tons per ha per year.
The cooperative received replanting funds from the Palm Oil Plantation Fund Management Agency amounting to Rp25 million per ha.
Currently, KUD members are also in the process of obtaining Indonesia Sustainable Palm Oil (ISPO) certificates.
Increase Farmers' Income
Acting Director General of Plantations at the Ministry of Agriculture, Abdul Roni, said that the main benefits obtained from oil palm partnerships are to increase productivity and farmers' income.
The partnership ensures a stable supply of raw materials for the industry, as well as stable Fresh Fruit Bunch (FFB) prices for smallholders.
"The Ministry of Agriculture encourages farmers to group in institutions such as Farmer Groups (Poktan), Farmer Group Associations (Gapoktan), or Cooperatives to get greater benefits," he told SUAR in Jakarta (7/10).
IPB Agriculture Observer Dwi Andreas said in running a partnership, make sure there are principles that are held, the goal is that both parties, both farmers and companies, are equally comfortable.
Some principles include certainty in establishing partnerships, not just limited to discourse.
The principle of equality is also important to prevent power imbalances and ensure mutual benefits.
"Openness about the interests and expectations of each party must also be discussed," he told SUAR in Jakarta (7/10).
