Sunday, 10 August 2014


The Indonesia Chamber of Commerce [KADIN] was not careless about seeing the problems in CPO industry in peatland within the context of environmental damage and natural disasters like flood and forest fire. Self reliant plant growers were part of the activities of growers in the peatlands which was sensitive to land dispute. “We have talked about Reducing Emissions from Deforestation and forest [REDD] plus. But the afield showed that land dispute was always problematic. We are throwing a discourse over Conflict Resolution [CR]. Fortunately some palm plantation companies were willing to show examples.” Darsono Hartono, Vice Chairman of Permanent Committee of Forestry, Sustainable Conservation and Climate of KADIN stated to Business News sometime ago.

KADIN’s initiative for CR finally was finally showing benefit. Not just companies but also for self  reliant farmers could benefit. The most thinkable was formation of CD in very company. The working platform anticipated what had always threatened palm plantations. “All officials have to do is to identify one by one the facts and problems afield.”

The difficulty for growers was transaction system with core companies. There was tendency that plasma big companies would be under pressure not to buy fresh plums of palm from plantations on peatland. The banks which channeled credit would be very attentive to the matter. This was the consequences of landscape application of environment orientated plantation in Southeast Asia. “Self reliant farmers are in big dilemma, because some farmers had already planted palm tress on peatlands. But if core companies buy the yield there was fear of pressure from banks. Even ‘big’ players were most unlikely to buy farmer’s palm anymore”

KADIN feared that self reliant farmers were tempted to plant palm tress on peatlands. They felt sure that factories would still buy fresh plums. So even narrow land in the backyard would be used as plantations.

May farmers were being offered the benefits of selling to processing factories. They had traumatic experience with non peatland plantations. The non-peatland plantations were located 20 meters from farmer’s homes. “Now there is new homework for KADIN and all stakeholders including NGO’s. We must constantly publics the best option for self reliant farmers, so they can keep planting palms without land problems, peat land or non-peatland.”

Meanwhile the director of Weatlands International Indonesia I Nyoman Suryadiputra saw that the management of peatland for palm plantation called for great effort, but it was not impossible that small investors were also reaping profit. For example palm independent growers of Tanjung Betung,
extended credit had already made appraisal and assessments.

Bank’s will see to what extent the environmental principles are applied by plantation companies. We have no data of the existing reality. Afield we can see may farmers plants palm on peatland of thickness above 3 meters. This is prevalent in East Java. Some Laws related to palm plantations prohibited it. Peatland above 3 meters are potentially destructive, but investment are prevalent there. Bank Mandiri must observe the matter so credit extention is not identical with deforestation,” Nyoman disclosed to Business News sometime ago.

Meanwhile Bank Mandiri underscored there would be no financing for growers who plant on peatland of 3 meters thickness. “We do not financing palm plantations on peatlands. We only finance plantations already planted. We also observe the feasibility aspect. If there is any financing for plantations peatland, it is given before the moratorium was effective” a Bank Mandiri official who refused to reveal his identity discloused to Business News.

The Government set moratorium for issuing new permits and improved management of primary forest and peatland. Moratorium was effective in 2011 through Inpres No 10./2011 but still spared 6.4 million ha of degredated forest. “I assure that palm plantations on peatland are not of Bank Mandiri Groups.”

Reality showed that growers would find it hard to find mineral land for planting palm, but Bank Mandiri hardly ever Monitored the process of palm planting. Financing was more channeled to ex- Dutch companies who were nationalized. Financing was also given to private companies who had chosen mineral land. Although mineral land had run out in Sumatra, new players were entering to explore peatlands. “Because there was booming. Price of palm reached Rp8,000 per kg, many land were processed by private companies but by percentage, peatland constituted more than 30 percent.”

Financing by Bank Mandiri was addressed to private companies with portofolio in plantation sector. One of them was a plantation company belonging to Sinar Mas Group as the biggest conglomerate palm plantation company on Indonesia. The company applied plasma plantation system. Assistance to Sinar Mas plasma farmers compassed 10 thousand ha of land. Factory operations with management assistance was running well. “at first there were obstacles, but they were overcome. Social hindrances was overcome by leveraging farmer’s capability. Credit was also extended for individuals. We see the land’s condusiveness, capital aspect, technology and so forth.” (SS)

Business New - July 4, 2014

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