The Palm Scribe

President Wants Simplification of Palm Oil Fund Disbursement for Replanting

President Joko Widodo demanded that the procedure for smallholders to obtain funds to help them replant their oil palm plantation be simplified so that the country’s replanting program could be accelerated and production of palm oil raised.

President Jokowi Speech IPOC 2018
President Jokowi gives a speech in the opening of IPOC 2018. (Doc: Gapki)

“I want the replanting to be accelerated. I demand that the procedure to obtain replanting funds be simplified,” said President Joko Widodo while opening the 14th Indonesian Palm Oil Conference and 2019 Price Outlook in Nusa Dua, Bali according to the Indonesian Palm Oil Producer Association (GAPKI) on its official website on Tuesday (30/10).

He said that so far, he has yet to see whether the replanting program for smallholder’s plantations, which he launched in Musi Banyuasin, South Sumatra, a year ago, was proceeding well or not.

He, however, deplored the fact that the disbursement of the replanting fund was difficult.

“It is said that there are 17 procedures. One is enough. The important thing is accountability, that it can be accounted for. What is so much money for? They should be returned to farmers, for their replanting, as soon as possible,” said the president who is more popularly known as Jokowi.

He said that he often heard farmers or smallholders complain that it was difficult to get access to the replanting fund.

“Make it as simple as possible,” Jokowi said about the disbursement procedure.

He said that replanting palm oil plantation is important, especially those belonging to smallholders which in general were around 30 years old. “How can they have a good production if they are not replanted?”

To encourage smallholders to replant their old or unproductive crops, the government is providing a subsidy of Rp25 million per hectare to farmers. The actual replanting cost stands at around Rp60-70 million per hectare. The government also provides quality seeds for better productivity.

Indonesia is now the world’s top palm oil producer, and consumer, with national output at around 42 million tons this year according to Jokowi. About 80 percent of the palm oil produced is exported.

Productivity, however, especially among smallholders, are still very low, at around 3 to 4 tons per hectare per year while big companies can produce around 8 tons per hectare per year. As a comparison, Jokowi said Malaysia, the world’s second-largest palm oil producer, can produce around 12 tons per hectare per year.

Jokowi also said that he has ordered the relevant ministers to ease the certification of palm oil plantation for smallholders. He said that as long as the land is not under dispute. “Issue the certificates for the people, why should it be made to drag on and on.”

He called on smallholders to make use of technology to achieve a sustainable palm oil industry and to continuously raise their productivity, including through replanting.

For officials and entrepreneurs, he stressed the importance of boosting palm oil exports, including by opening new markets. The downstream industries also need to be developed so that the country can gain added value and no longer just export raw material, in this case, crude palm oil (CPO).

Jokowi also reminded all to accelerate the implementation of the B20 program so that the country could reduce its fuel imports. He said he deemed the implementation of the program that was kicked off on October 1, to not proceed as fast as desired.

Meanwhile, GAPKI Chairman Joko Supriyono, was quoted in the same report carried on the GAPKI website as praising Jokowi for his real support for the development of the country’s palm oil industry. Supriyono said Jokowi not only helped open new markets but also was hands-on in defending the commodity overseas as well as in seeking new markets and pushing for replanting and the B20 fuel mixture program.

But Supriyono also said that industry players were also facing their own challenges, especially in the matter of permits and legality.

“Many GAPKI members are summoned by the authority because of permits and legality matters. This is worrying and causes business uncertainty,” Supriyono said.

The IPOC 2018 is attended by some 600 participants representing the various stakeholders in the industry, such as smallholders, plantation firms, refiners and processors, investors, and many others. The conference programs take place on November 1 and 2 and in the afternoon of November 2, the 2019 Price Outlook session will be held.

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