Asian Agri is sharing the palm oil premium from its sustainable development, worth Rp 3.69 billion with its some 30,000 plasma smallholders in the provinces of Riau and Jambi.
“This will be shared with 72 KUD (Village Unit Cooperatives), but in the form of infrastructure, not in cash,” said Muhammad Fadhil Hasan, Director of Corporate Affairs of Indonesian palm oil giant Asian Agri.
He said during a symbolic ceremony in Jakarta where the company handed the premium bonus to representatives from 12 of the 72 KUD, that the cooperatives represented some 30,000 plasma farmers managing some 60,000 hectares of palm oil plantations supplying the company with fresh oil palm fruit bunch in the provinces of Riau and Jambi.
Asian Agri, one of the country’s largest palm oil producers, also has operations in North Sumatra.
The premium was an incentive that the company received from selling its certified sustainable palm oil and under the company’s partnership principle, it was returning part of it to the farmers, Hasan said.
He added that it was now the fourth consecutive year that the company was sharing the palm oil premium from the sale of its sustainable palm oil with its plasma farmers.
He said that besides helping support infrastructure in the areas where the smallholders were, the premium shared with them could also be managed for capacity building.
“Today, Asian Agri is showing us a good work method, providing guidance to the farmers and part of the incentive are returned to the farmers. This should become a model for all palm oil companies in Indonesia,” Director for Plantation at the Ministry of Agriculture, Bambang, said at the same occasion.
Bambang praised the company as being one which is highly committed to the Indonesian palm oil sector and that provides a good model for sustainable palm oil.
“We position our partnership with farmers as our business model, as an inseparable part of the company’s business,” Hasan said, adding that the company fully realized the importance of palm oil to the country’s economy and also the important role farmers played in the sector, accounting for some 42 percent of palm oil plantations in Indonesia.
Asian Agri, Hasan said, held three certifications for its product, from the ISCC, RSPO and also the Indonesian Sustainable Palm Oil (ISPO) scheme.
The company said that it has helped its plasma farmer’s cooperatives to get RSPO certified since 2011 and by 2017, all plasma smallholders of the company had been certified through their cooperative.
Under the scheme, plasma farmers sell their fresh fruit bunches to the company, usually at a predetermined price, and in return, the company provides various assistance to enhance not only the welfare of the farmers but also improve the management and operation of their plantations.