PALMOILMAGAZINE, JAKARTA – The palm oil business plays a significant role in advancing the economy in various regions, especially in remote rural areas. The development of oil palm plantations not only optimizes land potential, but also creates a real socio-economic impact, which gradually improves the welfare of the surrounding community.
The presence of oil palm plantations in small and marginalized areas has successfully driven economic growth in a sustainable manner. As the oil palm plantations expand, the surrounding communities experience better economic growth. Economic activities, such as local trade, services, and basic needs for plantations, have become more active. When the superior oil palm seeds begin to bear fruit after 2.5 years of planting, harvesting activities begin. Every month, the palm fruit harvest will contribute directly to the local economy.
To quote economist Lincolin Arsyad, the economic growth of a region will move forward in line with changes in its economic structure. The economic development of oil palm plantations brings an increase in gross domestic product (GDP) and labor absorption in the region, having a major influence on regional prosperity. In addition, the palm oil business also increases demand for supporting goods, such as fertilizers and other agricultural equipment, expanding business opportunities for local communities.
The synergy between oil palm plantations and surrounding communities is key to sustainable growth. Successfully developed oil palm plantations help develop rural areas, providing sustainable socio-economic benefits. With a focus on sustainable development, this growth not only supports the company’s prosperity, but also creates a solid economic foundation for the surrounding communities.
As part of the vision of inclusive development, the management of oil palm plantations will continue to be carried out by prioritizing the balance between economic growth and community welfare. The sustainability of the palm oil business in synergy with the community is a commitment in supporting a better and more prosperous rural economy.
Dedi Junaedi, Vice Chairman of the Indonesian Plantation Business Association (GPPI), expressed the importance of collaboration between various parties to advance the palm oil sector and support the welfare of farmers, especially in transmigration areas, and emphasized the role of palm oil as a significant regional economic driver.
Dedi explained that the palm oil sector has become one of the main sources of income and employment in many regions, as well as the second largest foreign exchange earner after coal. However, despite its economic potential, the palm oil industry faces challenges in terms of productivity, legality and energy security,
and energy security. The government is currently working to strengthen the sector through the implementation of the B50 biodiesel program as well as supporting the replanting of smallholder palm oil.
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According to Dedi, one of the main obstacles faced by independent oil palm farmers is the lack of access to superior seeds and sustainable cultivation facilities. “The quality of seeds greatly affects the yield, and unfortunately many farmers use asphalt seeds or less quality seeds,” he said, when opening the FGD SAWIT BERKELANJUTAN VOL 16, entitled “Perkebunan Kelapa Sawit Berkelanjutan Menumbuhkan Ekonomi Masyarakat Perdesaan” or Sustainable Oil Palm Plantations Growing the Economy of Rural Communities, held by InfoSAWIT media and supported by BPDPKS (PFMA), Friday (1/11/2024) in Jakarta.
Dedi also emphasized that the high initial investment in oil palm plantations can be a burden for oil palm farmers, especially if the seeds planted are unproductive.
GPPI also encourages sustainable certification such as RSPO and ISPO as standards to enter the export market and guarantee better selling prices. However, funding challenges still prevent independent smallholders from meeting these certification standards. Dedi said, “Currently, assistance from the government is very important to strengthen institutions and equip farmers with knowledge and best cultivation practices.”
In addition, GPPI encourages the formation of cooperative institutions among oil palm farmers so that they can have a better bargaining position in selling their crops. “Independent oil palm smallholders need to be upgraded, not only as sellers of fresh fruit bunches, but also to be able to produce processed palm oil products that have added value,” Dedi added.
In the future, GPPI plans to accelerate the implementation of a carbon certification program for palm oil plantations, which is expected to support the government’s target in reducing national carbon emissions. Dedi concluded his statement by emphasizing the importance of collaboration between the central and regional governments, as well as all stakeholders to ensure the sustainability of the palm oil sector. GPPI hopes that these efforts will improve the welfare of oil palm farmers and make Indonesian palm oil a leading commodity that is globally competitive.
Meanwhile, Ignatius Ery Kurniawan, Editor-in-Chief of InfoSAWIT, mentioned the development of the palm oil sector which is considered to have a major impact on the economy of remote areas in Indonesia. According to him, the existence of oil palm plantations has turned rural areas into developed villages that can even develop into cities or provinces, although this journey takes decades.
“The alignment of the palm oil sector today is no longer just about building plantations, but also creating a positive impact on the community’s economy,” Ery said. Currently, of the 38 provinces in Indonesia, most have regional income supported by the palm oil sector. This, Ery said, shows that the palm oil sector has a strategic role in advancing the regions.
He emphasized the importance of the local government’s role in assisting farmers, especially in establishing institutions such as cooperatives. This support is needed to improve the welfare of farmers, considering that many farmers still work individually without strong institutional support.
In addition to institutional formation, Ery highlighted the great need for funding for the replanting of smallholder oil palm plantations, especially through subsidies from BPDP-KS. This support is considered important to increase the productivity of oil palm plantations and help farmers carry out sustainable cultivation practices. He said that the current cultivation practices of smallholder oil palm were still far from sustainable standards and needed guidance and
He said that smallholder oil palm cultivation practices are still far from sustainability standards, so they need guidance and financial support so that farmers can achieve maximum productivity.
He also expressed the need for facilities and infrastructure for oil palm farmers. According to him, subsidized facilities and infrastructure such as roads, bridges, and other facilities, are needed to support cultivation activities and improve access for oil palm farmers in remote areas.
On the occasion, Ery emphasized the importance of a balanced partnership between farmers and palm oil plantation companies. “Partnerships must be transparent and mutually beneficial. Without that, there will be many obstacles faced in the field,” he said. Ery hopes that this partnership can strengthen the position of farmers and companies in running a sustainable palm oil business.
Amidst the increasing needs of the export market, Ery also underlined the importance of sustainable certifications, such as ISPO and RSPO, as a key prerequisite. These certifications not only help improve palm oil cultivation practices but also increase the business value of palm oil products in the global market.
“To sell palm oil products abroad, we must have sustainable certifications, whether ISPO, RSPO, or others,” Ery explained. He hopes that with the implementation of these certifications, farmers can improve their welfare through wider market access.
Interestingly, in recent years, a number of oil palm farmers have implemented interculture cropping patterns by planting other commodities such as corn and chili around oil palm plantations. This pattern, according to Ery, has helped the surrounding community to fulfill their daily food needs and increase their income.
Ery concluded that the welfare of oil palm farmers is not just a dream, but can be achieved with the support and collaboration of various parties, including the government, companies, and other supporting institutions. “With collaboration, we can realize the best and sustainable palm oil cultivation,” he concluded.
Marselinus Andry from the Advocacy Department of the Union of Oil Palm Farmers (SPKS), expressed the importance of strengthening legality and institutions to support small-scale oil palm farmers. According to him, most independent smallholders in Indonesia still face various obstacles related to land ownership and bargaining position in the palm oil supply chain. With many farmers still only having a Land Certificate (SKT), SPKS seeks to assist farmers to obtain stronger ownership rights through data collection and land certification.
Marselinus outlined five stages that SPKS initiated to help oil palm farmers. First, SPKS conducts data collection and mapping of smallholders’ oil palm plantations by utilizing GPS and smartphone technology. This data is then stored on a server for further processing and analysis. The results of this analysis will provide an overview of the distribution of smallholder oil palm land, land legality, and plantation productivity.
After the data collection stage, SPKS assists farmers in obtaining land legality and business legality, such as the Cultivation Registration Certificate (STDB) which is important for obtaining more formal ownership rights. “We also help them build institutions such as cooperatives, which can strengthen their bargaining position in the palm oil industry supply chain,” Marselinus explained.
Training is an important part of the next stage. SPKS works with various parties, including academics and researchers, to provide technical training materials and institutional management. “This training will help farmers understand economic and legal governance,
so they can participate in the cooperatives or institutions they form,” Marselinus added. The training also includes capacity building, paralegal, as well as an introduction to sustainability practices relevant to sustainable palm oil certification.
Marselinus said that certification such as RSPO is a long-term goal for the cooperatives that have been formed. So far, SPKS has helped five cooperatives obtain certification, and several others are in the process. “We are targeting several cooperatives in the Sulawesi region to get certified this year,” he said.
SPKS also applies a conservation-based approach using the High Carbon Stock (HCS) and High Conservation Value (HCV) methods. This approach is implemented in a participatory manner with farmers and indigenous communities in the Kalimantan region, so that in addition to supporting sustainable certification, this program also conserves forests and strengthens farmers’ bargaining position in the global market.
In an effort to integrate farmers with the supply chain, SPKS collaborates with palm oil companies in several districts. This is expected to make it easier for farmers to access the market directly. Marselinus hopes that the government, companies, and civil society organizations can support smallholders in facing various challenges, such as access to legality and capacity building, to support the sustainability of the palm oil sector in Indonesia.
“The support of the government and business players is crucial in developing the potential of small-scale oil palm farmers, especially in realizing the sustainability goals of the palm oil industry that support the achievement of the Sustainable Development Goals (SDGs),” Marselinus concluded.
Strengthening Palm Oil Human Resources
Director of Citra Widya Edukasi (CWE) Palm Oil Polytechnic, Nugroho Kristono, conveyed the importance of the role of universities in building human resources (HR) in the palm oil sector. As the only polytechnic that focuses on the palm oil industry, CWE is now a reliable center for training palm oil human resources, thanks to the active role of its dedicated founders.
“CWE Polytechnic was established with strong support from its founders, who wanted quality education for the children of farmers from all over the archipelago,” Nugroho said. Currently, CWE Polytechnic has 970 students, 98% of whom come from oil palm farming families from Sabang to Merauke.
Nugroho also mentioned the increase in the number of palm oil campuses and training institutions in Indonesia since 2016. He appreciated the government’s support in developing palm oil human resources through various cooperation programs, including a program involving 23 campuses implementing palm oil training programs. This is expected to strengthen the skills and expertise of the younger generation to be ready to compete in the palm oil industry.
However, Nugroho admitted that there were still challenges, especially in attracting polytechnic graduates to return to their home regions to develop the local palm oil sector. Many graduates are absorbed by large companies, but support for alumni to develop palm oil businesses with their families or cooperatives in their home areas is still minimal. “Ideally, graduates can return and develop family oil palm plantations or form cooperatives, so that the productivity of people’s oil palm increases,” he said.
In addition, he also noted the importance of mentoring for oil palm farmers to improve the productivity and efficiency of their plantations. Currently, there are around 11 training institutions that assist farmers under the Directorate General of Plantations program. However, this number is still insufficient compared to the growing needs. Nugroho hopes that more training institutions will participate, so that all oil palm farmers in Indonesia can receive adequate agronomic training.
“More structured support from the government is needed so that education and training for oil palm farmers can be optimized. If our palm oil human resources are good, productivity will increase, and ultimately have a positive impact on the welfare of farmers and the sustainability of the Indonesian palm oil industry,” he explained. (P3)
