The year 2018 can now be remembered as the year palm oil, including in Indonesia, fetched weak prices for most of the year, causing woes and suffering for millions of smallholders. What are the lessons that can be drawn from this?
A drop in global palm oil prices will translate into a drop in fresh fruit bunch (FFBs) at farmer’s level. And because of the economy of scale, drops in FFB prices affect small-scale farmers much more than large plantation companies.
The vulnerability of smallholders to extended periods of low prices in an unstable market may be the most salient lesson to be learned from 2018 for smallholders.
The palm oil rush in the decades of 1980-1990, spearheaded by the government’s plasma scheme program, and the continuing rise in global demand for palm oil has led to a rapid expansion of the country’s oil palm plantations. Although initially involving large companies, small-scale farmers were quick to follow in their step, lured by the prospect of year-round harvesting possibilities.
Farmers who generally had a diversity of crop prior to converting their land into the monoculture that is palm oil, have become increasingly vulnerable economically because they now depended on a single source of income.
A sudden slump in palm oil prices for an extended period was enough to sound the death knell for many small oil palm smallholder farmers who usually manage plots of under 50 hectares, with the majority owning plantations below five hectares.
President Joko Widodo went as far as saying early in January that farmers should no longer plant fresh plots of land with oil palm saying that production was already saturated, and instead should plant other crops such as coffee and even stinky beans.
As converting to another crop in times of extended low palm oil prices, is not only costly and time-consuming, a possible solution that has already been applied in a number of regions is intercropping oil palm or planting other crops among the oil palms, for a limited period or for longer ones.
Intercropping presents numerous advantages for smallholders, as it not only provides additional revenues, crucial in times when palm oil prices are weak, and or food but also cut down on weeding and maintenance cost as it is now split between the two crops.
Among the other substantial benefits of intercropping is that it encourages poverty reduction for marginalized people especially women with no access to land, maximizes land use by farmers, assure better food security in households, and stability in yield and profit in smallholders’ oil palm plantations.
“The government is really encouraging the intercropping system in smallholders’ plantations, especially through the replanting with an intercropping program,” said Muhammad Akmal Agustira, a researcher with the Indonesian Oil Palm Research Institute (IORI).
Speaking to The Palm Scribe in an email interview, Agustira, however, said that the crop in the program should only be short-term crops such as corn, melon, chili, and others.
“Not for a hard crop, because intercropping is only recommended up and including TBM2,” he said TBM2 (unproductive crop) covers the period between 13 and 24 years.
He said that successful intercropping programs for young oil palm plantation have been recorded in South Sumatra’s Musi Banyuasin district.
For Rukaiyah Rafik. Director of the Setara Jambi Foundation which has been assisting oil palm farmers in Batanghari, Jambi, to plant intercrops, mostly pepper, the benefit of such moves was multiple.
“The farmers’ revenues become varied, the pepper plant can keep rats away because of the smell, and it can empower women,” Rafik said.
She said that pepper was recommended as an intercrop in Batanghari because of a number of reasons.
Local farmers are familiar with the plant and already understand its cultivation. Pepper also had quite a good economic value that can provide an additional income and the plant itself did not harm oil palms, and there was a market for the commodity.
Pepper she said was an intercrop for plantations where the oil palm had already reached heights of at least 1.5 meter so that the pepper can climb on the trunks.
She said that one trunk could be planted with up to eight pepper vines. When the oil palm oil is not yet productive, the best intercrops were seasonal with short harvest periods such as chili and corns.
To enable the pepper to grow well the trunk of the oil palm should be kept clean, harvesting should use a ladder and when the oil palm is being cleaned from dead stems, this should be done carefully so as not to damage the pepper plant.
Rafik said that besides pepper, other crops were also good candidates. She cited clove, although using this crop necessitated the distance between oil palm to be nine meters at least to allow the clove tree to grow well.
Other potential intercrop plants were stinky beans (parkia speciosa) known locally as petai, as well as areca nuts.
Agriculture Minister Amran Sulaiman has been championing an oil palm and corn intercropping program that is expected to cover one million hectares of smallholder plantation.
However, the program that was started in 2016, was focused on scheme smallholders with the host plantation company providing assistance, not the government. It was also only applicable to the pre-production period that followed replanting.
“With such integration, the income of farmers will increase drastically,” Sulaiman was quoted by the Republika daily as having said while visiting a plantation in Pasaman Barat, West Sumatra, where such a program was being held.
Meanwhile, trials conducted in Malaysia, the world’s second largest palm oil producer after Indonesia, involved planting alternate rows of oil palm and other crops.
In one of the trials, a single row of oil palm inter-planted with three rows of cocoa emerged as the most promising of the intercrop treatments. (Nawi Che Yusoff Leong, C.W. Jamaluddin Lamin, Felda Agricultural Services Corp., Kuala Lumpur 1986).