Palm Oil Smallholders Reap Partnership Benefits with Asian Agri

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Pawito Saring’s partnership with Asian Agri began 29 years ago when he decided to join the Indonesian government’s Plasma Transmigration Program (Perkebunan Inti Rakyat or PIR). 

For Pawito and 350 other plasma smallholders in Siak Regency of the Riau Province, it has been a mutually beneficial partnership for palm oil production since the beginning.

“Asian Agri trains us and provides assistance and guidance about practicing good and proper palm oil management. As a result, we are now able to gain plantation certification along with the premiums we receive, which greatly benefit us and our cooperatives,” said Pawito.

Pawito is the chief of the Mulus Rahayu Cooperative, which has so far received IDR 619 million in premiums from palm oil sales. The premiums reflect the higher price paid for palm oil that comes from plantations that have received sustainability certification from internationally-recognised bodies such as RSPO and ISCC. The cooperative consists of 351 smallholders who own a total of 702 ha of palm oil plantations.

Since 2013, Pawito and his cooperative have received a premium sharing fund from Asian Agri every year. These funds help the smallholders to improve production, ultimately leading to an increase in income.

For 2016 Asian Agri disbursed a fund of IDR 3.69 billion generated from palm oil sales to 72 partner cooperatives, comprising 30,000 plasma farmers altogether in Riau and Jambi.

The sharing of premiums with farmers is a form of appreciation by Asian Agri towards its partner farmers, for their efforts to consistently implement sustainable practices in managing their palm oil plantations.

This implementation of sustainable practices by the farmers ensures the quality of fruit and palm oil produced, which is in demand both in domestic and international markets.

“This fund is very meaningful to us as a group. It helps us to grow and improve the welfare of our members,” said Pawito, one of the farmers in Jakarta who received a share of the premium fund. 

“We will use some of the money to help our members who in are in the replanting phase. We might also use it to take a trip to another province to carry out a comparative study, to learn about the small businesses that we can run while waiting during the replanting phase,” he said.

A pioneer in palm oil partnership programs in Indonesia, Asian Agri’s program focuses on the intensification and welfare of smallholders to encourage economic growth and environment sustainability.

“The company partnership program with smallholders is needed to assist smallholders in facing these challenges, to ensure the implementation of the best practices in sustainable plantation management, and to improve the welfare of the farmers and their families,” said Fadhil Hasan, Asian Agri’s Director of Corporate Affairs.

In 2018, Asian Agri’s partner relationship with plasma farmers resulted in a positive achievement, in which all of the company’s partner plasma farmers achieved RSPO certification, after having previously gained ISCC certification.