The development of the agri business in Indonesia is still being challenged by the poor welfare of smallholders, even when these smallholders are the front liners of the industry who contribute to the country’s national income.
One of the ways to increase smallholders’ welfare is to develop a partnership between them and the companies, which has been done by the palm oil industry in Indonesia.
The partnership was discussed in a public discussion event themed “Partnership programs between palm oil companies with smallholders to increase national income” held jointly by the Department of Agri Business, The Faculty of Economics and Management, Bogor Agriculture Institute (IPB) and Indonesian Agriculture Economic Association (PERHEPI) at IPB National Convention Center (IICC) in Bogor, Indonesia on 27 October 2014.
Bustanul Arifin, the head of PERHEPI, professor of agriculture economics in UNILA and a senior economist from INDEF, explained that smallholders are often disadvantaged in the agriculture industry. Smallholders living in rural areas are often discriminated against and treated unfairly. For example, smallholders do not have the authority to determine the pricing of their agriculture products and are forced to accept prices set by the broker (because of dualism). A partnership scheme, said Bustanul, shows how companies and smallholders cooperate with each other to increase production of the smallholders’ land.