Palm Revitalization for Smallholders Is No Longer Just a Story

The emergence of innovative financing gives hope to the independent smallholders to increase their productivity and improve their wealth. Prior to that, for these smallholders, revitalization for their palm plantation was just a mere dream, as excerpted from InfoSawit magazine.

A collaboration was made between Berkat Ridho Kopsa (Palm Cooperative) with Bank BRI Agro and PT Buana Wiralestari Mas (a subsidiary of PT SMART Tbk), in order to finance a palm oil plantation revitalization belonged to hundreds of independent smallholders from the Kijang Makmur Village, Riau. It was the first milestone for innovative financing scheme, which previously initiated by the Indonesian Chamber of Commerce through the PISAgro (Partnership on Indonesia’s Sustainable Agriculture) program.

At that time, BRI Agro agreed to give a loan up to Rp48 billion in innovative financing scheme for the plantation revitalization program (Revitbun), where the plantation will be managed under one roof with a target area of ​​about 500 hectares. This is done to ensure that the management of palm plantations owned by the independent smallholders will be aligned with the principles of GAP (Good Agricultural Practices) to gain optimum results.

In this scheme, farmers with TBM (Immature Plant) for a period of approximately 48 months will get a compensation fee as much as Rp500 thousand/ha/month to meet the needs of their everyday life. They are also allowed to work in the company as employees, so that they can improve their income and knowledge of good agricultural practices.

The success stories of palm revitalization in Kijang Makmur Village inspire other areas in Riau to do something similar, such as in Bandar Padang and Bukit Meranti villages. The farmers there intend to take an innovative financing scheme for their palm plantation revitalization, in a collaboration with Bank BRI Agro to receive a loan amounted to Rp24,7 billion, as well as to get a funding from BPDP-KS (Fund Management Agency for Palm Plantation) as much as Rp10 billion, or about Rp25 million/ha/unit.

According to Burhanuddin, the KKPA Plasma Estate Manager of Indragiri Hulu Region from PT SMART Tbk, his company supports this scheme by delivering trainings for the independent smallholders. They also run a regular monitoring towards the farmers’ plantation to observe their development in plantation management. In this scheme, the transparency between companies and farmers are well advanced. Furthermore, an independent consultant also deployed to the field once every quarter to monitor the revitalization process in order to meet the target.

The implementation of innovative financing is supported by the Kampar District Government. Kampar Regent Jefry Noer hopes that the scheme will drive a revitalization process for palm plantations owned by independent smallholders in Kampar. Palm plantation areas in Kampar reaches 600 thousand hectares and spread over 21 districts, of which about 200-300 thousand hectares are managed by the independent smallholders. Through innovative financing scheme, he hopes to see higher productivity for palm plantations belonged to these smallholders.

Jefry also said that the management of these plantations must be done aligned with the GAP principles. "To protect the environment, the plantation management must be in accordance with the ISPO," said Jefry.

Cover Photo: @Sinar Mas