Indonesian palm oil companies are in talks with the government to seek ways to provide innovative financing for independent oil palm farmers in the country as part of efforts to increase yield, said Franky O. Widjaja, Chairman of palm oil giant PT SMART.
Speaking at the third International Conference on Palm Oil and Environment (ICOPE) in Bali on Wednesday, he said that the funding facility will be used to finance replanting program to help increase the yield of oil palm plantations managed by the smallholder farmers.
“We’re still discussing it with the government and making the necessary preparations. Hopefully it could be launched this year,” said Franky, who is also deputy chairman of the Indonesian Chambers of Commerce and Industry (Kadin) overseeing the agriculture and plantation sector.
He explained that the farmers will need the funds to sustain their livelihood for 3-4 years until their newly replanted oil palm plantations begin to produce. Under the plan, the farmers will use better oil palm seeds in the replanting program to allow their plantations to increase yield from around 1.5 million tons of CPO per ha per year currently to an ideal level of 4-5 tons per ha, a condition that would in turn allow the farmers to repay the loan.
Asked about the source of funds, Franky said that Kadin is in talks with the government to make the existing government-sponsored plantation revitalization funds effective, by encouraging large companies to guarantee the bank loans channeled to the farmers. In addition, the large companies will also help farmers improve their cultivation technique and ensure good agricultural practices so as to make sure that the replanting program works well.
Increasing the yield of the plantations run by independent farmers forms part of the goals of ICOPE, which is organized by SMART, WWF, and France-based research agency CIRAD, to increase palm oil production while at the same time protecting the environment.
The ICOPE event, held on February 22-24, was attended by 400 participants from 15 countries including industry stakeholders and experts. (rei)
