Replanting Financial Access for Independent Smallholders
12 June, 2020, Indonesia – Earlier this week, independent smallholders, with the help of PT Siringo-ringo, a subsidiary of Musim Mas, received replanting financial assistance from the Indonesian government, Indonesian Oil Palm Plantation Fund Management Agency (BPDPKS), and BRI (Bank Rakyat Indonesia) Bank.
The financial assistance would be helping smallholders of farmer association Gapoktan Mekar replant over 77 hectares of land sustainably. Although these smallholders are not part of Musim Mas’ smallholder program, Musim Mas assisted smallholders from Gapoktan Mekar with their financial assistance application letters and registration to the Directorate General of Plantations and the BPDP-KS. Musim Mas has also partnered Gapoktan Mekar as an offtaker.
Above: A replanting event was held on 10 June 2020 to mark the start of the partnership and replanting financial assistance. Present in the photo are representatives from the Labuhanbatu Department of Agriculture, Bilah Hulu Sub-district head, Tanjung Siram Village head, BRI, Musim Mas, and farmer association Gapoktan Mekar.
As oil palms reach maturity every 25 years, oil palms cease to be productive and require replanting. According to Chain Reaction Research, the cost of replanting sustainably is approximately IDR 50 – 60 million (USD 3,510) per hectare. Hence, the governmental assistance helps to reduce the financial stress on smallholders and encourages them to replant sustainably. A total of IDR 1.925 billion (USD 13,555,860) would be disbursed to smallholders from Gapoktan Mekar.
This is the second time Musim Mas has enabled independent smallholders to access financial assistance from the government and the Indonesian Oil Palm Plantation Fund Management Agency (BPDPKS).
Above: Renting the excavator and paying for manpower to operate the machine are some of the costs smallholders have to bear when replanting sustainably.
“Independent smallholders may face little access to finance,” said Rob Nicholls, General Manager of Programs and Projects of Musim Mas. “This impedes their progress towards planting sustainably, especially during replanting cycles as they would need to rent excavators, purchase seedlings and also find alternative sources of income for the next two to three years till their oil palms bear fruit.”