Strategic partnership on smallholder replanting, a new hope for South Sumatra smallholders towards productivity and better life
Jakarta, 10 September 2020 – PT Djuanda Sawit Lestari, a subsidiary of Sinar Mas Agribusiness and Food, along with the Multipurpose Cooperative Al Fa’iz Mandiri from Musi Rawas Regency, signed a credit agreement with PT Bank Rakyat Indonesia, Tbk. (BRI) for the Oil Palm Replanting (Peremajaan Sawit Rakyat/”PSR”) Programme. This strategic partnership will help 420 independent smallholders obtain funding for oil palm replanting which is worth more than IDR 150 billion, including procurement of seeds, fertilisers and technical assistance for a total area of 1,315 hectares.
“This partnership programme for smallholders’ replanting is expected to increase productivity of their oil palm plantations. This in turn, will improve the prosperity of smallholders and their families,” explained Iswanto Nadjaja, CEO of Sinar Mas Agribusiness and Food Plantation, South Sumatra region.
The agreement signing between PT Djuanda Sawit Lestari, a subsidiary of Sinar Mas Agribusiness and Food, the Al Fa’iz Mandiri Multipurpose Cooperative, Musi Rawas Regency and PT. Bank Rakyat Indonesia, Tbk (BRI) for Palm Oil Rejuvenation Programme, Palembang, South Sumatera at Cohive Building, Central Jakarta on Thursday, September 10, 2020.
The Fresh Fruit Bunch (FFB) yield from South Sumatra smallholders has been quite low because many oil palm trees are past maturity and need replanting. The smallholders have had limited access to good oil palm plantation practices and financing for replanting purposes. This strategic partnership is the answer to these challenges faced by the smallholders.
Budhi Novianto, Executive Vice President of PT BRI (Persero) Tbk’s Agribusiness Division, said, “The signing of this Credit Agreement follows up on the provision of PT BRI (Persero) Tbk’s Independent Smallholders and Plasma Estates Replanting facilities, amounting to IDR 1.75 trillion for a total area of around 14,745 hectares. These funding facilities will be disbursed gradually through a strategic partnership along with Sinar Mas Agribusiness and Food and several cooperatives in three regions, namely Pekanbaru, Medan and Palembang.”
“BRI also supports the government programmes in PSR and acts as a banking partner that gives credit facilities to both independent and plasma smallholders. It is expected that this financing can boost the productivity of oil palm plantations and empowers people to be more productive in this sector,” added Budhi.
Independent smallholders play a vital role in the Indonesian palm oil industry. Nevertheless, the less than optimal crop conditions, where oil palm trees are poorly maintained and produce less than 15 tonnes per hectare in FFB yields, require replanting as a means to expand production and achieve well-being for the smallholders.
Meanwhile, Chairperson of the Al Fa’iz Mandiri Cooperative Siti Marfuah said, “We are grateful for the strategic partnership that has been established in the cooperative – Sinar Mas Agribusiness and Food and BRI – to help smallholders obtain financing for oil palm replanting. The company also helps with oil palm plantation management and operations by providing certified, first-class seeds and fertilisers, as well as facilitation in sustainable agronomic techniques, ISPO and RSPO certification.”
The replanting process for independent smallholders takes quite a long time, especially to complete permit documents, partnership and financing documents needed by the bank. This is in addition to implementing replanting with good standards and applying best plantation practices. Therefore, cooperation and support from all parties related are of paramount importance.
In an effort to contribute to improved quality and quantity of our national palm oil, Sinar Mas Agribusiness and Food supports the smallholders’ oil palm replanting programme initiated by the government. Recognising the great benefits that the smallholders will enjoy from this programme, the Company is committed to working closely with smallholders to support our economic development.