Ensuring Compliance and Partnership: Addressing Palm Oil Mills without Plantations

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Illustration of palm oil mill. Photo by: Sawit Fest 2021 / Arjuna Hasanto Siburian

PALMOILMAGAZINE, JAKARTA – Numerous stakeholders have urged the government to assertively address the phenomenon of palm oil mills operating without accompanying plantations and lacking partnerships with local authorities. Professor of Economics at Universitas Riau, Prof. Almasdi Syahza, stressed the importance of palm oil mills adhering to all existing regulations. He cautioned that non-compliance could lead to future complications.

“The spatial relationship between mills, partnerships, and regional capacity must be carefully considered through feasibility studies,” he remarked in an official statement in Jakarta on Wednesday. Prof. Syahza highlighted the issue of escalating mill construction permits coinciding with regional elections, often overlooking regional capacity and disregarding regulations.

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According to Regulation No. 98/2013 issued by the Minister of Agriculture regarding Plantation Business Permit Guidelines, a palm oil mill must either possess its own plantation or establish partnerships with smallholders to supply at least 20% of the required materials for processing in the mill.

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“If the permits were published in association with politics, the impact would be happening after the 2024 regional election. The violence would be the material for political opponent to attack,” Almasi said, as Palmoilmagazine.com quoted from Antara, Thursday (28/3/2024).

He thought, the mills without plantations would disturb palm oil governance which runs well. That is why he emphasized it needs firm action from the central and regional governments to implement the regulations.

Former Head of Plantation Central Kalimantan Province, Rawing Rambang told that even though the government published palm oil mill permits with no plantations, the mill is obliged to get partnership with smallholders. “By the partnership, the mill would monitor the source of its fresh fruit bunch (FFB) production,” he said.

He also told that head of a government, from the regent to governor, should confirm that there would be cooperation or partnership before publishing mill construction permit.

“Regional government should verify it because it would be dangerous if it is unknown,” he told.

Rawing continued by having information about partnership, the regional government could make sure the capacity, availability in the mill to get FFB material from the villagers.

On the other hand, environment economic expert, Dr. Riyadi Mustofa told after Undang-Undang Cipta Kerja was published, mill construction process would be closer from environmental perspective.

“The regional government plays central roes to monitor the permit process in environment impact for the mill(s) to be constructed. This is about to confirm that it would obey every available regulation,” he said. (T2)

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