The dilemma of smallholder oil palm rejuvenation

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Bisnis Indonesia - Dilema peremajaan sawit rakyat

17 May 2023

By: Hendra Wibawa

Smallholder oil palm plantations are not in a good condition. In addition to suboptimal fertilisation, the portion of old plants in smallholder oil palm plantations is also more dominant. 

As a result, the productivity of smallholder oil palm plantations, which reached 6.02 million hectares, was low, which in turn could take a toll on the national crude palm oil (CPO) export performance.

Agriculture Minister Syahrul Yasin Limpo expressed the concern about the low productivity of smallholder oil palm plantations at the deployment ceremony of the Smallholder Oil Palm Rejuvenation Task Force at the Agriculture Ministry Office in Jakarta on Tuesday (16/5). 

Syahrul said that the national productivity of oil palm plantations has only reached between 3 tonnes of CPO per hectare (ha) and 4 tonnes of CPO per ha. 

Data from Statistics Indonesia (SI) also confirmed Syahrul’s statement. With the area of smallholder oil palm plantations reaching 6.02 million ha in 2021, its CPO productivity was only 15.5 million tonnes. In contrast, large private plantations which control 8.04 million ha could produce 27.4 million tonnes of CPO. 

This low achievement could threaten the future of the national palm oil industry if all parties fail to take comprehensive measures. 

One of the progressive steps that can be taken is to boost the Smallholder Oil Palm Rejuvenation (PSR) programme. 

Syahrul targets the PSR programme to reach 200,000 ha per year starting in 2023. This target is considered reasonable because it is supported by the formation of the Smallholder Oil Palm Rejuvenation Task Force. 

“I believe the target for the PSR programme should not be 180,000 hectares this year. It must be able to reach 200,000 hectares,” he said. 

Since the beginning, President Joko Widodo has targeted the PSR programme to cover 180,000 ha per year. Thus far, the realisation of the PSR programme has only reached 278,200 ha.

During the 2016-2022 period, the Oil Palm Plantation Fund Management Agency (BPDPKS) had disbursed up to Rp7.5 trillion of funds for the PSR programme. 

Efforts to boost the PSR programme took form after SI recorded the value of palm oil export from January-February 2023 had increased by 1.62% compared to the same period in 2022. 

Taking account of the President’s directives, he is confident that improvements of the upstream sector of smallholder oil palm plantations by replacing old or unproductive plants can target 2.8 million ha of potential land. 

Syahrul hopes that the Smallholder Oil Palm Rejuvenation Task Force can accelerate the achievement of the PSR programme, and help unravel problems and obstacles in the regions, both in proposing and implementing the PSR programme. 

“Particularly, I invite all parties involved in the smallholder oil palm rejuvenation programme, especially the oil palm farmers of the PSR programme throughout Indonesia, to make this day a momentum to improve the management of smallholder oil palm plantations in a sustainable manner,” he said. 

Director General of Plantations of the Agriculture Ministry Andi Nur Alam Syah said the Task Force Team involved approximately 30% of the employees of the Directorate General of Plantations. 

Currently, the Task Force Team is focused on the early stages in eight provinces of oil palm rejuvenation centres, namely Aceh, North Sumatra, Riau, Jambi, South Sumatra, West Kalimantan, West Sulawesi and Southeast Sulawesi. 

“In addition to the Agriculture Ministry, the Task Force will involve the Agrarian Affairs and Spatial Planning Ministry and the Environment and Forestry Ministry. Everyone will send a team,” said Andi. 

This year, he said, the PSR programme will target 200,000 ha once the Task Force Team commences their duties soon. 

He guarantees that the PSR data is very clear. Andi revealed that around 80,000 ha-100,000 ha of land came from the plasma partnership scheme, while 180,000 ha came from independent smallholders. “If there are problems, the Task Force is there to solve those problems. That will be an Agriculture Minister Regulation, an application related to smallholder plantations,” he explained. 

On the same occasion, Head of the Indonesian Palm Oil Association (IPOA) Eddy Martono welcomed the formation of the Smallholder Oil Palm Rejuvenation Task Force. According to him, rejuvenation or replanting of oil palm is urgently needed to increase the productivity of smallholder plantations which are now considered to be running in place. 

He is still counting IPOA members that will carry out the PSR. According to the plan, the partnership portion in which IPOA members take part is targeting a realisation of 100,000 ha this year. 

“With the current decline in the smallholder plantation productivity, the PSR is urgently needed. IPOA members will take the partnership portion. IPOA is currently counting members that will carry out the PSR programme. So, we do not know yet how many hectares of the 100,000 hectares [will be taken by] IPOA members,” Eddy told Bisnis. 

He also added that PSR is part of IPOA’s focus going forward. As he understood, the palm oil industry will face increasingly tough challenges in the future, both from within and outside the country. 

“Domestically, the challenge is that palm oil production is starting to stagnate and PSR is not going well,” said Eddy. Therefore, the formation of the Task Force Team demonstrates the government’s seriousness. 

In contrast, oil palm farmers who are members of the Indonesian Oil Palm Farmers Association (Apkasindo) are pessimistic about the PSR programme. Apkasindo Head Gulat Manurung said that the PSR programme would be difficult to achieve optimally this year if there are complicated administrative requirements from the Environment and Forestry Ministry. 

He estimated that the PSR programme could target at most 30,000 ha-40,000 ha. 

Currently, only 16% of oil palm smallholders have passed the administration of the PSR programme, while the remaining 84% failed because the Environment and Forestry Ministry assessed that the smallholder oil palm lands were in forest areas. 

Based on the Job Creation Law, land that is under 5 ha and has been occupied for 5 years can be replanted. 

“Actually, what happened was that the forest area entered the planted oil palm plantation area. We agreed not to clear the forest, but the fact is that we were deemed to be controlling forest area that is not covered with forest,” said Gulat. 

To be made clear of forest areas, Gulat thinks that this can be a burden for oil palm smallholders, for example in processing the paperwork. 

He asked the Environment and Forestry Ministry not to defend sectoral ego because the PSR programme was a presidential instruction. 

“President Jokowi said that the oil palms must be replanted and replaced with hybrid ones. The Environment and Forestry Minister does not want that because it is considered forest area,” he said