People’s Business Entities (BUMR) are deemed to be the most suitable institution to manage agricultural commodities or people’s plantation because the land owner and the farmers can directly manage a business within a corporation. The statement was voiced by Tanri Abeng, the Commissioner General of PT Pertamina (Persero) at a meeting of the World Islamic Economic Forum (WIEF) Foundation under the theme of Green Economy at the Le Meridien Hotel in Jakarta on Thursday (5/10/2017).
The concept has already been applied in Malaysia and the results look promising. “In Malaysia this has been there since 1959 and it is called Felda. In the palm oil sector, Felda is now the largest in the world,” Tanri said.
Tanri said that the potentials of Indonesia, especially in the palm oil sector, was much higher because of the surface of people’s palm oil plantations. Farmers manage at least 4.7 million hectares or 41 percent of the country’s 11.9 million hectares of palm oil plantation. The remaining 59 percent are in the hands of large corporations.
With such huge potentials, the government should facilitate the establishment of a good management structure at the farmers’ level, because the current existing cooperative system is not running well. With the establishment of people’s business entities, it would also be easier to channel banking credits.
The formation of such as people’s business entity, according to Tanri, would need at least three elements – a corporate structure, a management system and skilled human resources. “At present, there is only one BUMR that has been established, in the food sector, in Sukabumi,” Tanri said.
He said that the forming of such business entities was urgent for palm oil farmers. So far, without a legal business entity, they have faced difficulties in obtaining funding from banks and without adequate funding, palm oil farmers would have difficulties increasing their productivity.
Director General of Plantation at the Agriculture Ministry, Bambang MM, admitted that so far palm oil farmers have been a bit neglected. Because of the lack of attention and support from other sides, farmers in the palm oil sector are saddled with low productivity because of the use of seeds of lesser quality. They also face the problem of processing palm oil waste, access to financing, legal issues and also those of environmental conservation.
Deputy Chairperson of the Indonesian Palm Oil Producers Association (Gapki) Mona Surya, said that farmers are also facing the problem of the absence of organizations for them. “Gapki has been asked to help the farmers, but how can we help if they are not yet organized,” Surya said on the margin of the IPOS Forum in Medan last month.
Surya added that the existence of organizations was important to prove the legitimacy and credibility of the farmers. Companies have had difficulties working with farmers so far because the farmers were not yet gathered under a legal entity and often have to face complex situations or have problems legally.
Therefore, this is indeed the right time for farmers to unite and form their own official organization.