Strengthening Smallholder Institutions to Improve Livelihoods

Palm Oil Magazine
Strengthening Smallholder Institutions to Improve Livelihoods. Photo by: Sawit Fest 2021 / Farid Yuwono

PALMOILMAGAZINE, JAKARTA – Communities in remote areas, often living under economic hardship, have experienced significant growth due to the development of oil palm plantations. The cultivation of oil palm trees and the production of Fresh Fruit Bunches (FFB) have become the primary hope for these communities to improve their economic conditions.

Historically, Indonesia’s transmigration program aimed to break the isolation of remote areas by promoting horticultural farming. However, horticulture-based programs often faced significant challenges, particularly in marketing the produce.

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In contrast, transmigration initiatives in other regions focusing on seasonal crops such as rubber, coconut, cocoa, coffee, and oil palm have demonstrated faster growth. Among these commodities, oil palm plantations have proven remarkably resilient, continuing to thrive despite various challenges.

Also Read: SPKS and Nissin Foods Launch Collaborative Program for Sustainable Palm Oil Supply Chain

Economic theories, from Adam Smith’s foundational concepts to Michael Porter’s insights, emphasize that the sustainability of plantation industries must drive the creation of enduring value.

The competitiveness of a commodity stems from its comparative and competitive advantages, which require constant evolution to remain viable in both domestic and international markets. This principle underpins the resilience of Indonesia’s oil palm industry, which has been widely accepted in global and domestic markets due to its robust position.

The market acceptance of palm oil worldwide, including in Indonesia, is driven by its unique comparative and competitive advantages. As part of the global vegetable oil industry, palm oil serves as a versatile alternative, meeting various needs across food, cosmetics, and biofuel sectors.

Also Read: Musim Mas Group Successfully Facilitates IDR 20 Billion RSPO Credit Sales to Six Smallholder Associations

In Indonesia, data from the Ministry of Agriculture in 2023 shows that oil palm plantations cover 16.38 million hectares, with 42% (approximately 6.87 million hectares) owned by independent smallholder.

However, these Smallholders  face significant challenges in selling their harvests and sustaining their livelihoods, often forcing them to sell or mortgage their land due to economic pressures.

The sustainability of independent oil palm Smallholders  goes beyond land ownership; it is about securing the future of rural communities. Strengthening Smallholder institutions presents a potential solution. By forming cooperatives, small-scale Smallholders  can improve their bargaining power, access better markets, and withstand economic pressures more effectively.

Such organizations foster a spirit of mutual support, helping Smallholders  retain their land and heritage while contributing to a robust palm oil industry.

In the face of growing economic challenges, oil palm smallholders must seize opportunities to unite through organized institutions. Collective resilience through Smallholder associations can transform independent Smallholders  into an empowered force, safeguarding their livelihoods and uplifting rural communities for generations to come.

Start now—form small groups, unite, and build strong Smallholder institutions. Stay determined and keep up the spirit!

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