Members of the Mulus Rahayu Village Cooperative in Siak, Riau became the first Indonesian smallholder cooperative to complete the inaugural harvest from the latest replanted new oil palms, enjoying yields that doubled the previous harvest’s.
Managing a total 310 hectares, the 135 smallholders began replanting in April 2016 as part of the Indonesian government’s Smallholders’ Palm Oil Replanting Programme (PSR). Their first harvest in December 2018 saw yields of around 1.5 tonnes per month, up from the previous 0.7 tonnes.
The Mulus Rahayu Cooperative and Asian Agri have forged an over 30-year partnership that raised the agronomic practices of member palm oil smallholders, the use of productive and resilient Topaz palm oil seeds, and sustainability certification.
Oil palm productivity typically declines rapidly after around 25 years, but smallholders have been observed to be reluctant to replant due to the long lull time before the next harvest. As replanting requires expenses to rent equipment, many lack the skills to develop alternative income sources during the lull period, which can be as long as five years. The Ministry of Agriculture estimates the replanting costs at IDR 62 million per hectare.
Faced with declining yields, some cooperative members started discussing plans of a replanting programme in 2010.
“We were confronted by other smallholders: They said we were taking a big risk and would suffer from income loss for years,” said Jamal, a member of the monitoring committee in Mulus Rahayu Cooperative.
“They were worried that income from alternative businesses could not cover their daily expenses,” he said.
To help overcome these challenges, Asian Agri worked with those members of the cooperative supportive of the replanting programme. That assistance included help with the process itself, such as introducing them to banks which are willing to fund the replanting, and acting as a guarantor on behalf of the smallholders to obtain loans.
The company also helped the smallholders obtain assistance from Indonesian Oil Palm Estate Fund Agency (BPDPKS).
Asian Agri also provided smallholders with its superior Topaz seeds (renowned for their high yield capabilities), and included assistance on alternative sources of income, such as providing training and equipment to set up new businesses.
“Asian Agri assisted us in the management of our farm during the replanting process, until the new plants produce fruits and the harvesting season is coming,” Jamal said.
Jamal said that most of the smallholders were worried before taking their first step in the replanting process, but after seeing the results of their first harvest, their hard work has been rewarded.
“I am so relieved that my courage has finally paid off,” said Jamal.
Pawito Saring, the cooperative leader said: "We are grateful to be the first farmers to receive replanting funds from the government. Our partnership with Asian Agri has been beneficial, as the company supports us by ensuring that our needs and requirements are fulfilled. This is both in terms of the actual replanting process in the field but also in terms of economic support, so that we do not need to face significant challenges and the replanting can go smoothly,” Pawito said.
The best proof of the programme’s success has been the change in mindset of members who initially refused to participate in the replanting, he added.
“After the Mulus Rahayu Cooperative successfully carried out the pilot replanting programme, those smallholders who were once afraid and hesitant to engage in replanting process have registered for the next replanting programme. They start to see things optimistically and, more importantly, they’ve learned that replanting is essential for palm oil smallholders and we need to have courage and commitment to successfully execute it,” he added.
So far another 70 members of the Mulus Rahayu Cooperative have registered for the next replanting phase, targetted to begin later 2019.
The support comes as part of the company’s One to One Partnership Programme, which matches each hectare of plantation owned by Asian Agri with one owned by a smallholder.