Rejuvenation Of People's Palm Oil Needs Government And Banking Synergy

JAKARTA - The implementation of the people's oil palm rejuvenation program (PSR) designed to improve the welfare of oil palm smallholders, both plasma and independent, has received support and has become a commitment from the Government of Indonesia since 2015.

The government provides financial support for the PSR program through the Palm Oil Plantation Fund Management Agency (BPDPKS), which is IDR 30 million/ha for a maximum land area of ​​4 hectares/smallholder.

Special Staff (Stafsus) of the Coordinating Minister for the Economy for Strengthening International Economic Cooperation Rizal Affandi Lukman said, PSR is a program of the Government of Indonesia in order to increase the productivity of smallholders' garden produce, which in turn is expected to improve the standard of living of farmers.

"Although PSR has been proven to be able to increase farmers' income, we still need to work hard to improve the implementation and achievement of the current PSR," said Rizal in his remarks online at the Palm Oil Financing Forum: How Banks & Financial Institutions Support The Replanting Program in Jakarta, Tuesday, May 30.

It is known, from around 6.9 million hectares of smallholder oil palm plantations in Indonesia, there are at least 2.8 million ha of smallholder oil palm areas that have the potential to be rejuvenated.

However, until 2022, the planting area of ​​the PSR program has only reached 273,666 hectares of the target of 540,000 hectares in 2024.

"In addition to the extreme wet weather conditions which disrupted production activities and the PSR program which did not reach the target, high prices have also caused delays in replanting by many planters," he said.

Rizal said another obstacle relates to the limited grant funds provided by the government through BPDPKS to planters to fully support the PSR program.

"Until 2022, the planting area of ​​the PSR program has only reached 273,000 hectares or around 10 percent for 120,168 plantations with funds that have been allocated IDR 7.5 trillion, spread across 21 provinces of Indonesia," he said.

Furthermore, Rizal said that integrated collaboration and synergy was needed by involving several parties, one of which was banking, for the PSR program for the sustainability of Indonesian palm oil.

"Of course, the current government program has not been able to meet all the costs needed to build the PSR plantation, because PSR requires around IDR 50 million to IDR 65 million per hectare,"

"This makes opportunities for roles outside the government including the private sector and banking financial institutions to be very important for the success of the PSR program," he concluded.