
InfoSAWIT, JAKARTA - Partnership schemes are essentially key to supporting the development of national palm oil plantations. Through partnerships, a healthy supply chain is ensured, and efficient plantation management is guaranteed.
The partnership between palm oil farmers and large palm oil plantation companies remains a hot topic in the Indonesian palm oil industry. To date, according to the Policy & Socialization Department of PSR, Indonesian Palm Oil Entrepreneurs Association (GAPKI), Muhammad Iqbal, around 71% of palm oil farmers in Indonesia still do not have formal partnerships. Yet, the government has mandated partnerships to create a structured supply chain and ensure the sustainability of the palm oil sector in the country.
According to Iqbal, the primary goal of partnerships is to ensure a healthy supply chain and efficient plantation management. However, these partnerships face significant challenges on the ground. Many independent palm oil farmers encounter managerial and technical difficulties in managing palm oil plantations to industry standards.
Moreover, cultural factors and the historical context of transmigration involving land management by families lead many farmers to be reluctant to partner and prefer to manage their palm oil independently.
"Farmers managing their own palm oil land feel more comfortable not joining cooperatives or formal partnerships due to reasons of flexibility and freedom in management. Additionally, some generations of farmers still hold firmly to the principle of land autonomy and do not wish to be tied to large companies," Iqbal stated at the FGD SUSTAINABLE PALM OIL VOL 16, titled "Sustainable Palm Oil Plantations Growing Rural Community Economies," held by InfoSAWIT media supported by BPDPKS in early November 2024 in Jakarta.
Another reason that makes farmers hesitant to partner is financing issues. In partnership schemes, banks often require guarantees from partner companies to provide loans to farmers. This means that partner companies will be responsible for managing the land until the loan is repaid. This condition sometimes makes farmers feel financially bound, especially as production costs continue to rise. (T2)
For more details, read the November 2024 edition of InfoSAWIT Magazine.