PALMOILMAGAZINE, JAKARTA – The Indonesian Ministry of Agriculture has introduced a revised regulation on the trading system for oil palm Fresh Fruit Bunches (FFB) through Ministerial Regulation Number 13 of 2024. This new rule replaces the previous regulation, Ministerial Regulation Number 01/Permentan/KB.120/1/2018, aiming to enhance governance and provide certainty for FFB purchases by palm oil mills (PKS).
Under the new regulation, agreements between partnered smallholders and PKS are central to the FFB trading system. Article 2 mandates that PKS must purchase FFB from partnered smallholders based on mutually agreed contracts.
Article 3 categorizes partnered smallholders into two groups: Plasma Smallholders , who collaborate with PKS on seed supply, technical guidance, training, harvesting, and FFB sales; and Independent Smallholders , who maintain partnerships with PKS at least for FFB purchases.
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To qualify as partnered smallholders , participants must possess valid land ownership documents, such as land title certificates, statements of physical land possession, or other documents compliant with agrarian and spatial planning regulations.
Article 5 specifies that partnership agreements must include details such as the parties’ identities, rights and obligations, farm conditions (maintenance level, varietal composition, and yield test results for CPO and kernel), contract duration (minimum one planting cycle for Plasma Smallholders and two years for Independent Smallholders ), fruit acceptance criteria at PKS, and penalties for contract violations.
The regulation presents both challenges and opportunities for independent smallholders . With clear, documented partnerships, smallholders are expected to improve the quality of their FFB while gaining better access to PKS. However, they must also fulfill administrative requirements, such as providing valid land ownership documents.
Article 29 notes that upon enactment, Ministerial Regulation Number 01/Permentan/KB.120/1/2018 on Guidelines for Determining the Purchase Price of Fresh Fruit Bunches Produced by Smallholders (Republic of Indonesia State Gazette Year 2018 Number 85) is repealed.
This revised regulation is anticipated to strengthen FFB trading governance, enhance the sustainability of palm oil production, and foster better partnerships between smallholders and PKS. (P2)
