The Palm Scribe

Palm oil farmers looking for subsidize

The Palm Oil Farmers Association has challenged a government regulations on the management of a palm oil plantation fund to the Supreme Court saying that the regulation did not results in the use of the fund to help improve the welfare of palm oil smallholders.


The association on February 8, 2018, filed a demand to the Supreme Court for a review of Government Regulation Number 24 of 2015 on the plantation fund.

Vinsen who heads a palm oil farmers group in Tanjung Jabung Barat District in Jambi, said that although farmers welcomed the government regulations, but so far, the financial assistance that the independent small palm oil farmers can receive to replant their crop was still far from enough.

Under the regulations, farmers can get Rp 25 million per hectare for replanting their crop but the assistance was also capped at a maximum of five hectares per farmer.

Vinsen said that the fact remains that more than Rp 60 million was needed to rejuvenate a a hectare of palm oil plantation. “It is clear that the budget is not enough. We are asked to access bank funding but the mechanism is too complex. The solution of seeking to lend from banks is not a solution for farmers because they demand too many requirements and there are too many regulations,” he said.

“This fund can also only be received after we open a personal account that has a minimal of rp 35 million in it. This is crazy,” Vinsen added. He attributed the current policy to the government’s focus on developing biodiesel, something that eats up about 89 percent of the fund for the palm oil industry from the fund managed by the Palm Oil Plantation Fund Managing Agency (BPDPKS). That would leave only a small percentage of the fund for replanting.

The head of the West Kalimantan Chapter of the Chamber of Commerce and Industry, Santyoso Tyo had a different opinion regarding the allocation of fund for the palm oil industry, He said that  most of the fund should rather be used for the training and development of the human resource at all levels, from management down to the field workers. “With quality and professional human resources, palm oil production and its management would increasingly I, and this has already been ongoing, such as in Malaysia, “ Tyo was quoted by Sindonews as having said.

Under the government of President Joko Widodo, funding for the palm oil industry is raised from levies imposed on the export of palm oil. The levy is set at 50 US cent per ton of palm oil exported and 30 US cents for the export of one tone of palm oil derivative product. The fund is managed by the BPDPKS. In 2016, the levies yielded up to Rp 5,6 trillion.

The allocation of the fund includes for the replanting, biodiesel research and business development. In 2017, the government injected fund to the tune of Rp 7.5 trillion to five major palm oil companies Wilmar Group, Darmex Agro Group, Musim Mas, First Resources, and Louis Dreyfus Company (LDC).

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