The Palm Scribe

Smallholder farmers, the forgotten in Indonesia’s palm oil sector

MEDAN – Smallholder farmers account for almost 40 percent of the palm oil acreage in Indonesia, the world’s largest producer and consumer, but they remain mostly under the radar of the government and large companies, including in the country’s drive to turn the sector sustainable.

smallholder palm oil
ILLUSTRATION. Smallholder harvest oil palm fruit branch.

Bambang MM, Director General of Plantation at the Agriculture Ministry, said that 2016 figures show that of the country’s 11.9 hectares of palm oil plantations and that some 4.7 million hectares are managed by smallholder farmers.

He admitted that smallholder farmers have been neglected so far. The Government, however, was now starting to paying attention and is also calling on the palm oil industry to help them as partners.

These smallholder plantations, because of the absence of attention or support from others, have been facing problems of productivity, partly because of the use of bad seeds. They also face problems arising from rudimentary cultivation techniques, difficult access to financing, legality issues and in sustainability.

Mona Surya, deputy chairperson of the Indonesian Association of Palm Oil Producers (Gapki) said that another problem facing smallholder farmers is the lack of organization.

“Gapki is being asked to help these smallholder farmers, but how can we help them if they are not even organized,” she said, adding that organizations were necessary to provide legitimacy or credibility to them.

Companies find it challenging to work with smallholders who are unregulated and often have complicated or legally questionable situations.

Indonesia in 2015 kicked off a nation-wide certification process for smallholder farmers supported by the United Nations Development Program. It, however, also started with a number of cooperatives of smallholder farmers. The majority smallholders, not linked to any organizations, remain untouched.

Surya said that her company, not a smallholding, was already having difficulties meeting the requirements to obtain the Indonesia Sustainable Palm Oil (ISPO) certification and has yet to obtain it.

“ISPO certification is not easy at all, and it is time and money consuming,” she said. Certification should be much more daunting for smallholders, especially the independent ones, which have financial constraints.

ISPO was made mandatory in 2011 for all producers in the country. Its guidelines are aligned with those of the Roundtable on Sustainable Palm Oil (RSPO) standard.

Bambang said that most of these smallholders began planting palm oil after looking at those farmers taking part in plasma scheme who were doing well.

But unlike their plasma counterparts, smallholders do not receive outside help in cultivating their crop have no access to technical assistance or financing and had no assurance that their palm oil would have buyers.

With the lack of attention accorded to them, it is not surprising that these smallholder farmers have the lowest productivity level. They average between 2 and three tons of palm oil per hectare, compared to the 6 to 7 tons per hectare of large companies.

“There is a potential to quadruple their productivity, and accordingly quadruple their welfare,” Bambang said, explaining that studies have shown that palm oil productivity could be boosted to between 8 and 8.4 tons per hectare.

The government and other stakeholders, including companies that could act as partners for the smallholders, could help in many ways, such as with helping them gain access to quality seeds, replanting, access to finance and technical know-how.

When discussing assistance in replanting for smallholder farmers, however, Bambang appeared to reduce the definition of smallholder farmers.

“For those farmers who are capable to conduct replanting in an independent way, are ready and bank-eligible, then we will help them. From the industry partner, they are hoped to give them access to credits until the crop begins to produce,” Bambang said.

Such qualification would limit the impact of the assistance. The government’s practice of considering smallholders with up to 25 hectares as smallholdings does not help either. The average smallholdings are usually around two hectares. Without help from outside, smallholders are more liable to ignore sustainable practices.

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