InfoSAWIT, JAKARTA – The palm oil industry holds a strategic role in Indonesia’s economy, serving as a significant source of foreign exchange and providing jobs for millions, particularly in rural areas. Despite its vital contribution, the sector faces persistent challenges in governance, productivity, and partnerships that demand immediate solutions. Collaboration among the government, farmer associations, and industry players is seen as a crucial step to address these issues.

One pressing concern is the regulation requiring palm oil mills (PKS) to source 20% of their raw materials from their own plantations. This rule has sparked debate, as many mills lack their own plantations and rely on partnerships with independent farmers. Acting Director General of Plantations at the Ministry of Agriculture, Heru Tri Widiarto, highlighted the need for practical solutions, including revising the policy or adopting more flexible partnership models, such as the "Bapak Angkat" (Foster Parent) system. This model allows mills to collaborate with farmers to secure a sustainable supply chain.

Land legality remains another critical issue, with many plantations—especially those in forested areas—lacking complete permits. “The Ministry of Environment and Forestry (KLHK) has the authority to resolve this issue, and we are committed to facilitating solutions by involving all relevant stakeholders, including farmer associations and private companies,” Heru said.

Strong partnerships are pivotal to the success of the palm oil industry. Independent farmers often feel under-supported, despite laws mandating partnerships as a core principle of the sector. Heru emphasized the mutual benefits of collaboration between large corporations and smallholder farmers. “Big companies must support small farmers, and small farmers must meet good production standards to sustain the industry,” he added. (T2)