Strengthening Independent Smallholders in Indonesia

Transcription

1 Strengthening Independent Smallholders in Indonesia By: Oil Palm Smallholders Union/SerikatPetaniKelapaSawit (SPKS) Introduction Today, oil palm smallholders are the most important for sustainablepalm oil in the world. Therefore, it is important to see oil palm smallholders from all the problems and the challenges in order to raise smallholders into the higher level as other manufacturers group. If we look at the smallholders in Indonesia, it is very strategic with this issue. There are many things which could be the materials for the study; 1. Oil palm smallholders in Indonesia own a sizeable amount of 4.2 million hectares of oil palm plantations. 2. From the classification of oil palm smallholders, independent smallholders own more of 3.1 million hectares. Politically, the government has not yet set up a regulation to strengthen independent smallholders. Meanwhile, under the partnership scheme, the plasma smallholders must work with private or nucleus plantation. 3. Large scale palm oil companies are facing great challenges, even though from production and operations management side they are more professional. Nonetheless, along with social and environmental issues, production and expansion of large scale oil palm plantations are also dealing with many problems, such as global warming due to the conversion of natural forests and peat lands. 4. The management of independent smallholdershas not been governed well, such as the institution for independent smallholders, smallholders' access to independent finance and the internal institutional for independent smallholders have not been established yet.

2 To see the strategic sides, it is very relevant to empower independent smallholdersto respond sustainablepalm oil in the world today. With the challenges today, it is necessary to create innovation in order to expand and enlarge the participation of independent smallholders. SPKS Approach human approach smallholders institutional approach capital approach regulation approach One of the lessons we have conducted is through capacity building for oil palm smallholders. One of the outputs of this activity is to increase smallholders incomes through productivity. The reflection that we do have four approaches which are human approach, capital approach, regulatory approach, and organizational approach. The first approach is seen in terms of human capacity. This perspective of this approach is that when we change the human character and it has the potential to manage the plantation hence their economy will automatically increase. The implementation of this approach is the intensity and character/culture change from the ordinary farmer to be amazing. In this process, to build awareness on the importance of establishing farmers GAP (good agricultural practices) in the plantation so that sustainability standards are met.

3 Theawareness on the importance of environment for smallholders related to global initiatives to reduce emissions due to the conversion of peat lands and forest area. The main objective of this approach is to increase the awareness of smallholders to change the orientation of only building the plantationto become more integrated with other sustainability issues. The second approach to look at the capital perspective. This approach sees that human capacity building approach would have its disadvantages if they are not supported by the materials which they need in order to increase their crops. The materials include fertilizer, oil palm seedlings, effective means transportation for the transport of fruit and other agricultural means. This approach will be conducted through the existing cooperative. The capital approach is expected through savings and loan unit from banking services to be more responsive and respect the livelihoods of independent smallholders. Cooperatives can also run activities such as TBS transport, supplying fertilizer, agricultural means and development / rejuvenation of oil palm plantation and infrastructure improvements. The third approach is the view of the regulatory framework. This approach sees that even if smallholders have the capacity and have the capital to procure materials for independent plantation,but there is no regulation to hold fertilizer or to protect land / plantation smallholdersthen surely it would be very difficult. Several related matters, such as legality of land or a certificate and protection towards the community-owned management area that can be used for agriculture / plantation. Governments often release permission to enable the private sector to divert management area owned by the communities. Fourth approach is from the smallholders organizational institution side. The perspective of this approach sees that if there has not been strong organization and intensely build from the inside (of the smallholders), then it will not change the patterns of independent growers. This approach will seek to encourage the smallholders participation andtheir agendas, such as policy and other needs on smallholders level. These include, but not limited to, the institutional consolidation of oil palm smallholders.

4 All four approaches above are complementary to each other. Step by step is conducted to empower independent smallholders. In the future, SPKS forward will try to combine or use the above four approaches to strengthen the position of independent smallholders. Problems and Initiatives of SPKS The initiatives will be implemented through the four approaches. These will become the strategies to strengthen the independent smallholders in Indonesia. We highly believe that when we are able to empower the second and forth approaches, it will be easier to answer the other challenges. The capital approach will use the current cooperative. We strongly believe that the plantation companies are protected by the existing capital. They are also supported by their professional plantation management. Plantation companies generally are linked to certain banks who finance them. The challenge that they are facing is related to social and environmental issues from their unfriendly business. To learn about the smallholders in other countries, such as Thailand and Malaysia which institutionally they live and have the ability which are equal to the plantation companies. This is due to the government s protection towards the smallholders which allow them to own the access towards financial institution. We do not intend to imitate the two countries, but at least we can adapt the lesson learned from the examples that have been set by the two countries for the smallholders to sustain their business. In order to link the strategies to become alternative solutions, below are the problems faced by smallholders: Have not own the technique / capacity in implementing GAP To use the uncertified oil palm seeds

5 Often do not receive the supply for fertilizer, since it not well documented. The government often uses quota system in supplying fertilizer for one district, although there is no data on related to the total amount of area belongs to independent smallholders. Beside, the price for fertilizer is relative expensive. The legality of the community s plantation business. Smallholders have no certificate for the plantation they own. The funding to apply for certificate for each hectare is around 3-4 million rupiah in district level. The access to market the result of the plantation production is sold to the middlemen. The middlemen offer the price which is below the government s or mill s price. Beside, mill often finds difficulty to accept the FFB from smallholders since there is no clarity regarding its origins. The road used to carry FFBs is often not supported with the proper infrastructure. The effect of this is that the truck to carry FFBs requires higher cost. The awful road condition is disrupting the transport system which requires 8 hours after being harvested. It would then likely add up to one week time. The risk is that there could be more fruit bunches and high sorting in the mill. The management for the transport is limited compare to the trucks availability. The consequences of the united smallholders, the FFBs are not consolidated in one area to simplify the transporting process. There has not been smallholders institution hence create difficulty in the consolidation process of the plantation result and the improvement of the facilities and infrastructures. The problems above will be the reference for developing the strategies to strengthen and empower the smallholders. The approach will be used are the strengthening and developing the cooperative in order to develop inclusive business, empowering SPKS as political forum for smallholders to be able to affect policies which will benefit them, and also to build collaboration with mills regarding the supply of FFB. The strength of the

6 initiative is to integrate the overall approach to become a power which will be able to build smallholders plantation. Implementation To learn about the condition of independent smallholders require organizational support and strength. Today SPKS has encouraged oil palm smallholders empowerment through the four approaches. The strengthening of oil palm smallholders will be conducted through trainings on plantation management ToT. This training has resulted 287 plantation coaches which is located in 7 districts in 5 provinces (Jambi, Riau, North Sumatera, East and West Kalimantan). SPKS will continue to support these trainings to be held in smallholder group, village, and sub-district level. The training is expected to stimulate the oil palm

7 smallholders spirit to improve their management. We highly believe that there is a need to develop the smallholders character through relevant trainings. There is also a need to support cooperatives so that they would be able to sustain the smallholders activities. The cooperative would become the institution where smallholders organize their FFBs, credit, transportation, and other smallholders infrastructure needs. A strong cooperative in Indonesia is the cooperative that is able to sustain the livelihoods of its members. SPKS is expecting a strong cooperative. A strong cooperative should have a business agency which focuses on its sector and has its own capital power. Capital really helps to support and sustain the smallholders livelihood, such as the needs of fertilizer, oil palm seeds, and other improvement on the related infrastructures. The smallholders difficulty in Indonesia is that national banks have no funding system to enable the access for smallholders and cooperatives. Banks trust their infestation towards big companies. Beside, the support from banks to companies is also supported by government through Ministry of Agriculture regulation No. 33 / SPKS expected a funding system, which is more active than cooperative for its members in the form credit. The funding for cooperative is received from the members infestation through saving and loan unit. SPKS continuously develop initiatives related to cooperative strengthening in order to achieve a better institutional management. This will be promoted to the oil palm smallholders in order to unite them in cooperative as the solution to improve their financial situation. As addition to the points that have been mentioned above, SPKS will also try to improve policies and urge government to release better policies which will govern the smallholders life in the future. In 2011, SPKS has successfully urged the Constitutional Court to revoke article 21 and 47 of Plantation Act no. 14/2004. Beside, SPKS along with other civil societies have successfully urged the legislative to release Farmers Protection Act. There are many initiatives for the improvement for relevant policies which is not supporting the smallholders independence, such as the Ministry Agriculture Regulation no. 33/2006, no.

8 26/2007and no. 17/2010 regarding FFB pricing. Surely, in order to push for policies reform requires organizational strength and continuous consolidation of oil palm smallholders.