Indonesia Seeks to Bolster Palm Oil Sector by Increasing Plantation Productivity, Strengthening Role of Smallholder Farmers


NOVEMBER 02, 2017

Nusa Dua, Bali. Indonesia, the largest palm oil producer in the world, will seek to increase plantation productivity and strengthen the role of smallholder farmers, Coordinating Economic Affairs Minister Darmin Nasution said at a conference on Thursday (02/11).

From Nov. 1-3, the Indonesian Palm Oil Association, known as Gapki, is holding its 13th "Indonesian Palm Oil Conference and 2018 Price Outlook," an annual event that gathers relevant stakeholders in the palm oil industry to exchange views, network and exhibit new products.

A series of discussions on pressing challenges the industry faces will be held during the three-day conference and exhibition event. Government regulations, policies, black campaigns and price fluctuations are among the most prominent themes for discussion.

"While there are some negative views about the industry's practices, we can't deny that palm oil is an important part of Indonesia's development," Darmin said during his key note speech.

The minister said boosting palm oil plantation productivity and improving farmers' welfare are integral parts of the government's agrarian reform initiative aimed at narrowing wealth disparity through better land utilization and redistribution. The initiative also seeks to encourage increased productivity of low-income earners.

President Joko "Jokowi" Widodo kick started a replanting program by planting oil palm trees with high-quality seeds for more productive crops at plantation areas owned by smallholder farmers in Banyuasin, South Sumatra on Oct.13.

Gapki chairman Joko Supriyono expressed gratitude for the government initiative, calling it a big step towards improving national palm oil productivity.

"Increasing smallholders' yields cannot be achieved by replanting only, it must be followed by improving cultivation culture, applied both by the new replanting and existing plantations. Therefore, to accelerate and extend the program, companies need to contribute," said Joko, whose Gapki has served as an influential lobbying group with 638 members.

Plantations owned by Gapki members cover around 3.63 million hectares of land, or more than 30 percent of the total oil palm plantation area in the country.

"The success of such partnerships to increase palm oil yields will minimize land conversion to oil palm plantation," he said.

Palm oil plantations cover around 12 million hectares of land across 22 provinces in the country. Practices by players in the country, who include corporations and smallholder farmers, are often criticized by environmentalists for causing negative impacts to the environment, from the loss of biodiversity due to forest and land clearing to the occupation of carbon-rich peatlands by planters.

However, the sector's contribution to the national economy is undeniable. Various industry data shows nearly 50 million Indonesians depend on palm oil and palm oil derivatives in their daily lives.

However, as the nation is today the behemoth in the industry, holding the predicate as the world’s top producer and exporter, the sector's contribution to the economy and people's welfare is undeniable. Various industry data shows that about 50 million Indonesians depend in their everyday lives on palm oil and its derivatives, be it directly or indirectly, through multiplier effects the sector has created. *Furthermore, the sector brought $18.6 billion in foreign exchange revenue into the country last year.

"Every year, the conference brings together representatives from key players from industries, international organizations, national and local authorities and academics to share their knowledge and experience in the industry," said Joko, who is also vice president director at Indonesia’s largest listed palm oil producer, Astra Agro Lestari.

Mona Surya, the chairperson of the organizing committee for this year's conference, said 1,258 conference participants from 26 countries registered for the event, which  helps stakeholders keep abreast of the latest market trends and price outlooks.

Indonesia, the largest palm oil producer in the world, will seek to increase plantation productivity and strengthen the role of smallholder farmers, Coordinating Economic Affairs Minister Darmin Nasution said at a conference on Thursday (02/11). (Photo courtesy of Gapki)

Joko said strong support from the government is vital to allow the country to maintain its market leadership in the world. He also called on the government to expand its export markets beyond traditional destinations like the United States, Europe, China and India.

He also called on the government to review various regulations that potentially discourage foreign investment in the sector and to lobby foreign governments to recognize the so-called Indonesia Sustainable Palm Oil standard, which promotes better managed plantation sustainability.