Sustainability and Global Competitiveness

Recent discussions between Indonesia and the European Union have cantered on deforestation rules related to the palm oil industry. As Chairman of GAPKI, how do you plan to address this issue and ensure that Indonesia's palm oil production remains sustainable and competitive on the global stage?

A sustainable Indonesian palm oil industry is certainly a goal that all stakeholders in Indonesia want to achieve and earnestly implement. The government, entrepreneurs, and even farmers agree on sustainable governance. Our concern for sustainability is not only considering the market needs but also the needs of the Indonesian people so that this industry can continue to make an excellent contribution to the country's economy, and the existence of oil palm plantations also contributes to access to education, health, and a good social environment for communities around plantations, especially in rural areas.

The Indonesian government already has a sustainability assessment tool, the Indonesian Sustainable Palm Oil Certification (ISPO). ISPO is mandatory for companies operating in Indonesia. The government is now also conducting socialization and various efforts so that farmers carry out the certification. Members of the Indonesian Palm Oil Association (GAPKI) of 731 companies with total area around 3.7 million hectares, and more than 85% of them have been ISPO certified. We are also assisting so that partner farmers of GAPKI members can also be ISPO certified.

The European Union's policies related to deforestation and various other accusations are not the first time. Historically, multiple efforts to discriminate against the Indonesian palm oil industry have often been launched through various issues, primarily environmental issues, and deforestation. We emphasize that European regulations for the Indonesian palm oil industry are discriminatory.

Data from the Ministry of Environment of the Republic of Indonesia states that deforestation in Indonesia fell by 75 percent in 2019-2020. Indonesia also reduced the area affected by forest fires to 91.84 percent. In addition, various research results state that palm oil is the vegetable oil with the highest productivity and the most minor land use. Then, to meet the global community's needs, palm oil is the most environmentally friendly and sustainable solution.

The European Union's anti-deforestation policy stipulated in the Anti-Deforestation Law (UU) or the European Union Deforestation Regulation (EUDR) will pave the way for Indonesian palm oil exports to new markets. However, the European Union's Anti-deforestation Law policy will hit millions of small farmers in Indonesia because this law requires due diligence, which concerns some categories related to high-risk country benchmarking.

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Empowering Smallholders

There's an initiative to accelerate the replanting program for smallholder palm oil farmers, who currently dominate 42% of the Indonesian palm oil industry. How does GAPKI plan to support these smallholders in their replanting efforts and bridge the existing gaps in the industry?

Smallholder plantations, both plasma and independent, have become essential to the Indonesian palm oil industry. The size of oil palm farmers' plantations, which has reached 42%, has now entered a period of rejuvenation with an average plant age of over 25 years. There are 513 thousand hectares of plasma oil palm plantations spread across 15 provinces, some of which are farmers assisted by Indonesian Palm Oil Entrepreneurs Association (GAPKI) members who need rejuvenation.

As we all know, the Replanting program for smallholders has become a priority for the Indonesian government. Through the Indonesian Palm Oil Plantation Financial Fund Management Agency, which is an agency under the Ministry of Finance of the Republic of Indonesia, the government assists farmers amounting to 30 million per hectare. However, despite this, farmers still need help with various administrative obstacles related to Cultivation Rights documents and Ownership Certificates in obtaining financial assistance. In line with the government, the GAPKI has made an oil palm replanting program for farmers as a priority program. On September 18, GAPKI kicked off the first  replanting program in Kampar, Riau province. All GAPKI members throughout Indonesia will then implement this program. GAPKI will provide administrative assistance and transfer knowledge and technology related to sustainable palm oil management.

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Navigating Regulatory Changes

The Indonesian government has recently issued a regulation on revenue sharing funds for palm oil plantations. How do you perceive this new regulation impacting the palm oil industry in Indonesia, especially for the stakeholders and members of GAPKI? Are there any strategies or initiatives in place to adapt to these regulatory changes and ensure the continued growth of the industry? 

GAPKI welcomes the policy of revenue-sharing funds for regional governments. GAPKI hopes that with this profit-sharing fund, local governments can experience the contribution of palm oil and use it for regional development through infrastructure development, as well as developing oil palm farmers in programs to improve sustainable agricultural governance and increase the production of smallholder oil palm plantations.

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