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Scheme Smallholders Program: Reducing Financial and Aspiration Poverty

May 14, 2021


According to the Ministry of Agriculture, currently, smallholder farmers are estimated to manage 6.72 million ha or 41% out of 16.38 million ha of oil palm farm in Indonesia. The development of oil palm plantations through partnerships in Indonesia aims to, among others, improve the farmers’ livelihoods through tapping on the resources of palm corporations. Musim Mas started its Smallholders Oil Palm Development Program (Kredit Koperasi Primer Anggota – KKPA) in 1996 and has benefited over 3,500 households across West Sumatra, Riau, and West Kalimantan.

“Before the establishment of KKPA, the community was struggling financially. Most of us were in between odd jobs and could only meet our family once a week. Now, we have a stable income and can live together with our family in a proper house, send our children to schools, take vacations, and go to the hajj pilgrimage and Umrah,” said Amir Syaripuddin, Coordinator of KKPA Merbau Sakti. “Compared to the past, our situation has improved tremendously, and we are now blessed with more resources to lead the lives we prefer.”

Living comfortably in a fully furnished two-story house and driving an upper-class car, Amir, a former bike-taxi driver and well-digger, confessed he never imagined he could accomplish what he had today if not for the KKPA.

(Photo taken before Covid-19)

“I only graduated from elementary school, but after becoming a member of KKPA, I realized the importance of education and started furthering my studies. Now, I have a bachelor’s degree in economics. Recently, my eldest daughter graduated from medical school in Medan, North Sumatra, and wants to be a doctor,” said Amir proudly.

(Photo taken before Covid-19)

Besides Amir, Jakfar, a Treasurer at KKPA Rawa Tengkuluk, also experienced a tremendous change in his life after joining KKPA. Jakfar recalls Musim Mas as one of the pioneer companies that successfully established KKPA in the region.

“Back then, I only had my farm. Now, I am able to own a car, renovate my house, and send my three children to college. One of them is even pursuing a Masters’ degree in Yogjakarta,” said Jakfar. In 2016, Jakfar also started a bird’s nest business using bank loans, and he used the earnings from KKPA to help with the loan repayment.

(Photo taken before Covid-19)

Both Amir and Jakfar revealed that the KKPA program benefited its members and communities in various ways, beyond agronomy. It improved their financial status and inspired them to think and dream bigger, especially for their next generation. The shift in mindset is crucial in uplifting populations and breaking the poverty cycle as lower-income communities often face financial poverty and aspiration poverty[1].

As part of the KKPA program, Musim Mas conducts training on Good Agricultural Practices, Harvesting, Fertilizing, and imparts knowledge on High Conservation Value, Occupational Safety and Health. Practical assistance is also provided to members, including bank loan guarantees, transfer of quality seeds and fertilizers.

“As PT Musim Mas operates alongside the communities, they (the company) also built roads and opened access to and from the communities. With improved access to roads and transportation, we could transport and sell our yields and products,” said Jakfar.

Musim Mas also integrates the smallholder cooperatives into the sustainable palm oil supply chain by helping them with sustainability certifications such as the Roundtable on Sustainable Palm Oil (RSPO), International Sustainability and Carbon Certification (ISCC). With these certifications, their Fresh Fruit Bunches have a better price point and are sustainably produced, improving both their livelihoods and the environment.

Read more about the impact we have on the lives of smallholders, villages, and communities in our Social Impact Report.

[1] https://academic.oup.com/ej/article/126/590/165/5077418

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