PALMOILMAGAZINE, JAKARTA – The Indonesian government’s palm oil biodiesel program represents a strategic solution to achieving energy sovereignty and reducing reliance on fossil fuels. However, to realize this vision, it’s essential to prioritize the involvement of smallholders. As key players in the palm oil supply chain, smallholders hold a vital role and should not be overlooked.
Independent smallholders are crucial to ensuring the biodiesel program’s sustainability. The government should promptly establish a partnership system that benefits all parties involved, including both companies and smallholders. A well-regulated partnership framework would allow the biodiesel initiative, prioritized by President Joko Widodo, to operate effectively.
Why is it so important to involve independent smallholders? For one, they control around 40 percent of Indonesia’s palm oil plantations—an essential share of the supply chain, underscoring that energy sovereignty cannot be achieved without them. If left out, the government would miss a significant opportunity to harness this potential.
Also Read: Promoting Smallholders Plantation Productivity Through SRP in South Kalimantan
Furthermore, including smallholders in the biodiesel supply chain could provide substantial economic support to rural communities. Most independent smallholders rely heavily on income from their plantations. By integrating them into the biodiesel program, it is hoped they will see greater economic benefits and an improved quality of life.
Unfortunately, Sabarudin, Chairman of Serikat Petani Kelapa Sawit (SPKS) said that biodiesel program that was launched by President Joko Widodo in 2015 did not fully deliver the positive for the smallholders. Even though the early goal was about to welfare the smallholders by having partnership with the companies that process biodiesel, until now, the partnership did not realize equally.
“Biodiesel program has been running since 2015 but the partnership between the smallholders and biodiesel companies is beyond expectation. We did small research in Riau Province where biodiesel industries operated in five regencies. The fact showed the smallholders in the province did not get the output from the partnership. They still sell their plantation production to the middlemen not directly to the biodiesel companies,” Sabarudin said in Diskusi Keberlanjutan Biodiesel, with the theme tema “Mewujudkan Kemitraan Petani Dan Industry Biodiesel Dalam Pengembangan Biodiesel Sawit Untuk Kesejahteraan Petani Sawit“, that Palmoilmagazine.com attended, Thursday (24/10/2024) in Jakarta.
That is why SPKS emphasized it would be significant to publish a regulation that would oblige biodiesel companies to get partnership with the smallholders namely around the companies’ concession areas. Sabarudin also mentioned that SPKS would keep encouraging that biodiesel program development would really deliver impacts for the people around, namely to increase the plantation productivity. The smallholders’ plantation productivity is low in number still, about 12 tons of fresh fruit bunch (FFB) per hectare per year, less than what the companies generally produced that reached 25 tons FFB per hectares per year.
“In the future, biodiesel development should involve the smallholders more intensively to really deliver the impacts. Besides, smallholders replanting program (SIDR) and access to get fertilizers and superior seeds should be the focuses for the new government to increase their plantation productivity,” he said.
Sabarudin did hope that evaluation to B50 program should involve every stakeholder, particularly the smallholders so the partnership between them and biodiesel companies would be realized.
Ahmad Kailani, Chairman of Perisai Prabowo said his commitment to monitor and evaluate biodiesel program, namely about the numbers of the mixture to be 50 percent (B50). It would run with the smallholders’ interests. In his statement, he also emphasized that it would be significant to actively get involved in supervising the government’s policy about palm oil biodiesel for it would deliver the impacts for the smallholders themselves.
“I am one investigator in Komisi Pengawas Persaingan Usaha (KPPU) and having direct field contacts namely with the smallholders. I do see how the mature FFB should be immediately sold. If not, it would get rotten. In the future, the stakeholders should be the government’s partners in the era of President Prabowo Subianto and in Perisai and SKPKS, we would monitor every policy to be fair for the smallholders,” Ahmad said.
He also mentioned that what the smallholders need would not be only about superior seeds or SIDR but also should get involved in every policy published about palm oil industries. Palm Oil Plantation Fund Management Agency (PO PFMA) to support SIDR should be well noticed because there would be challenges to more than 25 year – trees that would need replanting program.
“PO PFMA would be the institution that managed the fund from the smallholders to get SIDR but it has to be right on time and equal for the smallholders in need. Many palm oil plantations are more than 25 years and should get the program to remain the productivity or even increase the production,” he said.
Kailani thought, the main reason for Perisai Prabowo and SPKS joined to discuss the issue was that because Prabowo Subianto did really care about the smallholders’ welfare and would be committed that their roles would not be put aside. “Prabowo is very consistent with the smallholders’ rights. The government’s policy would be no more imagination only but should be down to earth and delivering impacts for the smallholders through the partnership scheme with the business world,” he said.
He also emphasized that B50 should deliver the real advantages for the smallholders not only for the stakeholders. “Biodiesel policy should positively deliver impacts for the people namely the smallholders. We would always keep montoring that the partnership scheme would not deliver losses for the smallholders,” he said.
Edi Wibowo, Director of Bioenergy, General Directorate of New Renewable Energy and Energy Conversation Ministry of Energy and Mineral Resource said that it would be significant to develop biodiesel sustainably, including the plan to implement B100 in crude palm oil (CPO) base. It is still in process and the characteristic of the fuel should be better than nowadays alternatives.
“We are preparing B100 program but it is being researched to confirm the stability and efficiency. Palm oil biodiesel characteristic could be much better but there are some technical challenges to solve before it would be fully commercialized,” Edi said.
He thought biodiesel development should involve not only Ministry of Energy and Mineral Resources but also the collaboration with Ministry of Agriculture, Ministry of Economy, other stakeholders, the companies and the smallholders. The government and the related parties are formulating the financial and incentive policy to support biodiesel commercialization particularly about the partnership among the plasma, independent smallholders, and biodiesel companies.
“Biodiesel production would really depend on palm oil as the main material. That is why the roles of smallholders both the plasma and the independent ones would be very significant. The partnership between the companies and the smallholders should get escalated so biodiesel program would be successful not in industrial scales but also delivering direct profits for the smallholders,” he said.
He continued that it would be important to develop the supporting technology in biodiesel application for many sectors, including the heavy tools, diesel machines, agricultural equipment, and the power. The government is committed to get sustainable research to confirm the smooth transition from B20, B30, B35 until B100 programs.
“Just like the old days, biodiesel development started with the (road) tests and getting the same research, just like in B20, B35, and forth. We would involve other parties to confirm the successful program from the technical to social aspects and would be positive for many,” Edi said.
Boost Productivity
Indonesia still faced the big challenges in palm oil plantation sectors that the second to the third generations experienced. Mula Putra, the Institution Coordinator Directorate of Palm Oil and Various Plants, General Directorate of Plantation Ministry of Agriculture, said that palm oil plantations still faced the issues, such as, the decreasing productivity and disease attacks.
“As the trees get older, the area and the plants start being contaminated by some diseases, suchas, blas disease, bud rot syndrome, Ganoderma and Gusarium oxysporum that made yellowish lines on the leaves. This kind of disease mostly comes up in the replanting program after five years,” Mula said.
The main challenges are the low implementation of good agricultural practices, Ganoderma development, limited qualified human resources. “The planters’ human resources both individual and institutional, are limited in their capacity and skills,” he said.
Besides, many smallholders’ plantations did not qualify the legal aspects, such as, land certificate, cultivation documents, and Indonesian Sustainable Palm Oil (ISPO) certificate. Some of their plantations were indicated in forest regions that multiplied the complex issue about the legal and sustainability in plantation business.
The other issues about smallholders’ plantations were about the lack of mechanism process and long supply chain process. These made the FFB yield low and delivered impacts for the decreasing income.
To solve these, the government would encourage to take advantages on palm oil side products, escalate to process the waste which was not maximal still. SIDR would be the priority to improve unproductive plantations, would improve the infrastructures, intensify the plantations, and provide better.
The government would escalate the human resource capacity by delivering scholarship program, training for the planters. It would reinforce the data by conducting cultivation documents to improve FFB governance, escalate the smallholders’ income by realizing intercrop program, livestock, and taking advantages on the wastes.
Mula Putra was optimist that by these, the smallholders’ plantation productivity could be reaching 30 – 40 tons FFB per hectare with the yield about 23 – 25%. It is hoped to support palm oil biodiesel program and escalate their welfare in Indonesia.
Wiko Saputra, Palm Oil Biodiesel Governance Researcher said that biodiesel trade in Indonesia significantly increased since the mixture policy aggressively ran since 2015. The government successfully implemented B35 as the reference to keep increasing the mixture heading to B100 in phase.
But Wiko said the technical field challenges that made palm oil production stagnant. “To realize B40, it would need the additional 2,5 million tons of CPO,” he said and it would be better to empower the smallholders to support biodiesel industries than focusing on decreasing the export nationally.
For biodiesel got increased in demands, CPO needs did too. “If it is assumed that biodiesel demands get increased about 3% per year, in 2035 when B60 would be implemented, CPO needs for biodiesel industries in this country would be reaching 34,35 million metric tons (MT).”
Indonesia has the big potential in the independent plantations. Now Indonesia has about 5,31 million hectares of independent plantations that could produce up to 14,87 million MT CPO per year or equal to 13,91 million kiloliters of biodiesel. The biggest potential would be deriving from the plantations in Sumatera and Kalimantan.
Wiko thought biodiesel industrial supply chain model could not enable the independent smallholders to get additional values maximally. That is why it needs the new model of supply chain that may enable them to supply their plantation production to mini palm oil mills that belonged to the smallholders’ groups and directly supply to PT Pertamina as the offtaker for biodiesel.
“Many independent smallholders’ plantations got decreasing productivity and needed replanting,” Wiko said. Their institutions were weak still, the regulation about mini palm oil mill permit, was the issue, their knowledge about downstream sectors needs to get increased. Their data about name and address were not complete still and made the government difficult to confirm area preparation, legal, and preparedness to support biodiesel industries.
He also mentioned it would need to conduct strategic things to reinforce their plantation in biodiesel supply chain. If these succeed, there would be bigger advantages for them to escalate the sustainability in biodiesel industries in Indonesia.
Palm Oil Collaboration
Mansuetus Darto, National Board of SPKS said that it would be significant to get cooperation among the ministries to develop biodiesel industries in this country. He thought, the collaboration between Ministry of Energy and Mineral Resources and Ministry of Agriculture wold be the key to reinforce palm oil biodiesel supply chain. “The successful key would be about the coordination among the ministries namely between Ministry of Energy and Mineral Resources and Ministry of Agriculture,” he said.
Darto also said that the policies that involved companies to get biodiesel quota should cover the cooperation with the smallholders. This would be important to confirm sustainable supply chain in biodiesel industries that directly involve the smallholders. “The companies that supply biodiesel should be in cooperation with the smallholders and Ministry of Agriculture must have the data about the smallholders and can be used to support the policy,” he said.
One concrete thing that Ministry of Agriculture has been doing is by collecting the independent smallholders’ data through polygon database. He thought the data would be significant to map where the smallholders were and how many independent palm oil – mills were, namely, belonged to the smallholders’ unions. “The data could be used to decide which mills would be supplying biodiesel industries,” Darto said.
He also said about what the smallholders faced, such as, the decreasing productivity and weak institutions. He also encouraged the government namely PO PFMA to keep supporting the programs to increase the plantation productivity, provide the infrastructures. “The programs would be significant to support the smallholders’ plantations,” he said.
But he also reminded the negative impacts from biodiesel expansion program namely about area expansion. SPKS analyzed that if biodiesel mixture gets escalated, up to B40 or B50, there should be additional plantations about two million hectares. This would trigger deforestation. “The increasing biodiesel program should be balanced with the policies that would have something to do with the environment, social, potential conflicts, and obedience of the companies to the regulation,” he said.
For the new government would work in the era of President Prabowo Subianto, Darto hoped the government would get the clear and accurate information to formulate and publish the right policies. “The new government should know the right and no lie – policies so the future policies would make Indonesia go further and better,” he said. (*)
