PALMOILMAGAZINE, JAKARTA – The palm oil industry has a strategic role in the Indonesian economy, not only as a significant contributor of foreign exchange but also as a sector that provides employment for millions of people, especially in rural areas. Nevertheless, the sector still faces various challenges in terms of governance, productivity, and partnership that require immediate solutions. Collaborative efforts between the government, farmer associations, and industry players are crucial to address these issues.
One of the main issues that needs to be resolved is the regulation regarding the obligation of Palm Oil Mills (PKS) to fulfill 20% of raw materials from their own plantations. This rule has been a source of debate as many mills do not have their own plantations and rely on partnerships with independent smallholders.
Heru Tri Widiarto, Director General of Plantations at the Ministry of Agriculture, emphasized the importance of practical solutions, such as policy revisions or the adoption of more flexible partnership models such as the “Bapak Angkat” system. This model allows mills to work with farmers to ensure the sustainability of raw material supply.
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The issue of land legality is also a major concern. Many oil palm plantations, especially those in forest areas, do not yet have complete licenses. “The Ministry of Environment and Forestry (KLHK) has the authority to resolve this issue, and we are committed to facilitating the solution by involving all relevant parties, including farmer associations and private companies,” Heru said.
Strong partnerships are key to the industry’s success. Independent smallholders often feel under-facilitated, despite the law mandating that partnerships are at the core of the palm oil industry. Heru emphasized that collaboration between large companies and smallholders is crucial for mutual prosperity. “Big companies must support smallholders, and smallholders must meet good production standards to support the industry,” he added. (P2)