Oil Palm Farmers Hardly Benefit From Gov't Policies: Union

Jakarta. Oil palm farmers have called on the government to take concrete actions to implement policies designed to create a sustainable palm oil industry and deliver supportive programs for oil palm growers.

The Oil Palm Smallholders Union (SPKS) alleged that despite the adoption of several key government regulations to make the industry more sustainable, no significant impact has been seen. On the contrary, palm oil prices dropped once the regulations took effect, heaping more misery to already struggling farmers.

President Joko "Jokowi" Widodo signed the Presidential Instruction No. 6/2019 on the National Action Plan of Indonesian Sustainable Palm Oil in November last year, detailing industry guidelines for the 2019-2024 period.

The instruction was aimed at improving farmers' capacity and capability, certifying land use for oil palm plantations, utilizing palm oil as a source of renewable energy, enhancing diplomacy for sustainable oil palm plantations and accelerating the creation of Indonesian sustainable palm oil.

A year earlier, Jokowi also signed the Presidential Instruction No. 8/2018 on Palm Moratorium and Palm Oil Productivity Escalation.

The SPKS has found some issues in the government's sustainable palm oil industry plan, most notably the plummeting price after the regulation was implemented. 

"Price is a key issue for the smallholders. To increase productivity, they need more fertilizers and to buy more fertilizers they need to increase revenue," Sabarudin, SPKS's manager for organization and membership, said in a recent discussion in Jakarta.

Sabarudin said that since January, the Indonesian Oil Palm Estate Fund (BPDB-KS) began to charge a levy on palm exporters, cutting prices of fresh fruit bunches (FFB) and crude palm oil (CPO).

The levy was revoked in 2018 for dragging down prices but somehow it was reinstated this year, he said.

"When the levy was revoked, the CPO price increased slightly. After it was reinstated in January, the impact on FFB and CPO prices has been bad. In North Sumatra, West Kalimantan and Riau, prices dropped significantly," Sabarudin said.

He revealed that many oil palm plantations in Indonesia are located inside forest areas, as much as 3.4 million hectares of them.

"That's quite a big number. They're not only owned by smallholders but also large-scale palm oil companies," Sabarudin said.

The union accused the BPDB-KS of putting too much emphasis on the government's B-30 program – which obliges a 30 percent mix of biofuel in diesel fuel products – than on sustainable palm oil policies.

"In the biodiesel industry, most companies buy palm fruits from smallholders but that doesn't benefit farmers because many of them sell the fruits through middlemen. We hope the government can cut the supply chain short so smallholders can directly benefit from the biodiesel industry," union chairman Mansuetus Darto said.

Conflicting Data

The Environment and Forestry Ministry didn't deny the existence of palm plantations inside forest areas, but said their size was nowhere near as large as SPKS claimed.

"According to our data, the real figure is between 1.7 million and 2.3 million hectares [of palm plantations]. There are conflicting reports about this, including one claiming 5 million hectares. We have been working to synchronize the data because it's very important for area management," Rivani Noor Machdjoeri, a ministry official in charge of agrarian conflict, said in the discussion.

According to Rivani, opening an oil palm plantation in concession forest areas is allowed.

However, the government will punish companies who clear forests illegally to convert them into oil palm plantations, he said.

"We are very prudent about this issue. We can't just close down plantations belonging to smallholders, because that would eliminate their source of living. We use social approaches to handle this kind of dispute. However, if the plantation belongs to a large company, we will take them to court," Rivani said.