Independent Smallholders and the Meaning of Independence

Independent Smallholders and the Meaning of Independence

InfoSAWIT, JAKARTA–It has been 72 years that Indonesia got its independence. We should appreciate the founding fathers who struggled for every challenge that Indonesia faces. One of the challenges relates to palm oil plantation.

Palm oil plantation has been operating in this country for about 108 years. It means, it is older than the independence day of Indonesia. Palm oil grows for many generations, passes the regime of power, though in the colonialism or not.

What about the smallholders? How do they mean the independence day of Indonesia?


The smallholders officially cultivated palm oil plantation since the people’s integration program run in the palm oil plantation, called, Perkebunan Inti Rakyat (PIR). It was the program that was launched in the era of President Soeharto, in 1979 to 1982.


The local people and the transmigration assimilated in the plantation to cultivate palm oil. The smallholders cultivated 20% of the areas, and the companies cultivated 80% of the areas.


In the form of cooperation, the plantation companies enlarged the people’s plantation (plasma) and after the plasma produced, it would be conversed to the smallholders or union. During the harvest season, the smallholders sold their fresh fruit bunch (FFB) production to the palm oil factories of the companies that had contract in the name of Memorandum of Understanding (MoU) between the unions and the companies. The payment would have 30% discount as the form of credit.


Until now, the partnership scheme between the company and the smallholder has been changing, as same as the changing regulations published by the government, the will of the company or the banks.


From the long history of partnership, since it was made, there are some notes from the smallholders and the nowadays fact, that is, there is no successful story to make the smallholders stand on their own feet.


The first, President JokoWidodo made the breakthrough to the smallholders’ fund, starting from the making of Palm oil Plantation Fund Management Agency (PFMA). Until now, there have been about Rp 11 billion gathered by the Agency.


Unfortunately the smallholders are difficult to get the fund for the regulation and related ministry managing the fund that advised to make partnership with the companies. There are many smallholders not interested in getting the fund offered or because of the bigger interest credit.


The second, the independent smallholders are urged to join partnership scheme. They thought, the way ‘to be inside’ is not right enough. The independent smallholders have lived for years by their cultivation.


It is admitted, the independent smallholders need development from the government about the agricultural production infrastructures (the seed, fertilizer, and herbicide) and the way improvement in the plantation to transport. Besides they need facilitation to sell FFB because they sold it to the middlemen within cheaper price than what the provincial government decided.


The third, the cheaper FFB may make the palm oil company get the advantage from the pattern to decide FFB price.


The fourth, the agrarian reform agenda has no side for the smallholders. The plasma programs are considered as parts of agrarian reform. As a matter of fact, the agrarian reform has deeper understanding, that is, the sovereignty of the smallholders on the area. In the main-plasma partnership scheme, the smallholders or the people have no sovereignty in it and could be said, ‘labor on their own land’.

(Chairman of POSU, Mansuetus Darto)

Dear readers could read the complete article in InfoSAWIT, September 2017

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