Proposal for a Mandatory Partnership Requirement under the PSR Program

Jatmiko Krisna Santosa, President Director of PT Perkebunan Nusantara IV (“PalmCo”), has proposed that the Government require the implementation of the Smallholder Oil Palm Replanting (Peremajaan Sawit Rakyat - “PSR”) Program through a partnership scheme to ensure compliance with plantation quality standards and strengthen farmers' institutional capacity. The proposal is based on the fact that the productivity of smallholder oil palm plantations has remained stagnant, with a persistent productivity gap between smallholder plantations and company-owned estates.

Jatmiko stated that weak farmer institutions and the use of planting materials that do not meet established standards are the principal constraints on the productivity of smallholder oil palm plantations. According to him, making partnerships mandatory under the PSR Program would enable smallholders to receive guidance and technical assistance from qualified partners capable of implementing sound operational standards.

“The PSR Program should be made subject to a mandatory partnership requirement. Participation through a partnership should be compulsory. However, the partner need not necessarily be a company; farmers may also partner with a cooperative that has the necessary capacity,” he said. Furthermore, as part of this mandatory partnership requirement, Jatmiko proposed that the Government periodically publish a list of qualified partners to serve as a reference for smallholder oil palm farmers when selecting their partners.

Jatmiko was of the view that improving the productivity of smallholder oil palm farmers would not only contribute to enhancing farmers’ welfare. More broadly, increased productivity would also serve as an important catalyst for the success of the national energy self-sufficiency program through biodiesel.

Heru Tri Widarto, Secretary of the Directorate General of Plantations at the Ministry of Agriculture, stated that the Ministry would review the proposal to introduce a mandatory partnership requirement under the PSR Program to ensure that its implementation can be carried out effectively and provide tangible benefits for improving the productivity of smallholder oil palm farmers.

“We will jointly review this proposal to ensure that, even if it is made mandatory, it can actually be implemented effectively,” he said.