Palm oil industry needs to be revamped: Observers

The Jakarta Post, Jakarta

The so-called "partnership" between companies and farmers in the palm oil business needs to be reconsidered because it benefits big corporations, not farmers, say observers.

Nursuhud, a member of the House of Representatives' Commission IX overseeing social welfare, labor and transmigration affairs said the partnerships, established in 1977, were not equitable.

"The companies, as the core, possess the ability to control everything, like deciding how much of which crops will be accepted and also the criteria," he said Friday during a discussion on the welfare of Indonesian palm oil farmers.

"Farmers are always placed in a marginal position. The farmers are never involved in any attempts to reshape the paradigm."

Indonesia has some 7.2 million hectares of oil palm plantations producing some 16 million tons of crude palm oil. Indonesia controls nearly 36 percent of the world's CPO market, second only to Malaysia with 47 percent.

However, observers say there is still no system to integrate farmers into the industry, as equals of companies.

Suprapto, an oil palm farmer in Peser regency, East Kalimantan, who has been involved in the business for more than 20 years, said that during the harvest farmers often experienced losses because factories could not accommodate the entire crop.

"The price is quite good, but the problem is that we cannot sell all of our crops," he said.

Abetnego Tarigan of the group Oil Palm Watch said companies did not have a substantial interest in buying crops from farmers because most have their own plantations.

"They treat the farmers only as buffers to anticipate times when their plantations do not produce enough," he said.

He said the current system allowed companies to monopolize the industry because they controlled everything from transportation to manufacturing.

Director of plantation protection at the Agriculture Ministry, Hendrajat N, said to improve the welfare of palm oil farmers, the government would launch a program in 2008 to revitalize oil palm plantations.

The program will include the replanting of old plantations and the provision of soft loans so farmers can own at least four hectares of land.

"The revitalization program will also require (oil palm) companies to buy up to 20 percent of the company's needs from farmers," he said.

"The program also aims to develop a sustainable, environmentally safe, oil palm industry." (uwi)