Indonesian palm oil farmers may get US$2-billion boost

02.04.2018

Nearly US$2 billion could be diverted from a fund that supports palm oil companies in Indonesia and used instead to improve the lot of palm farmers.

The country’s anti-graft agency is seeking ways to apportion almost 90 percent of the US$2.1-billion fund to welfare-like projects, it said.

The total sum — 28 trillion rupiah in local currency — was collected from dozens of plantations over three years (2015-2017) and, according to a government regulation issued in 2015, used to support biodiesel projects.

However, an official at the country’s corruption eradication commission said on March 27 the money would be better spent on improving the lives of more than 5 million farmers who manage their own plantations and have contributed to the nation’s coffers.

"We want the government to use the fund for farmers, to improve their lives and the quality of their produce," said Sulistyanto, deputy of the Prevention Bureau of the Corruption Eradication Commission (KPK).

He made the remarks to ucanews.com after commissioners met farmers seeking the anti-graft body's support for an official review of a 2015 government regulation on the collection of plantation funds in Jakarta.

Sulistyanto said the regulation ran counter to the plantation law issued in 2014 and reminded the government that the fund must be given to palm farmers, not companies.

"We want it managed cleanly and transparently. The commission will monitor the use of the fund to ensure the farmers receive it," he said.

Sulistyanto also criticized overlapping regulations in giving permits to plantation companies.

He blamed a lack of coordination between local and central governments.

"The regulation creates room for bribery or corruption between local governments and companies," he added.

Marcelinus Andry of the Palm Oil Farmers Union agreed with the KPK, saying the government must not neglect the farmers who have worked hard and contributed to the country’s palm oil sector.

He said they could use the fund to buy fertilizer and better seedlings to upgrade the quality of crude palm oil from Indonesia so that it could be more competitive in international markets.

"The initial goal in collecting the money from the plantations was to improve the productivity and welfare conditions of palm oil farmers, not corporations," he told ucanews.com.

In February, the Palm Oil Farmers Union called on the Supreme Court for a judicial review of the 2015 regulation that oversees the collection of plantation funds.

Andry said the union does not endorse the use of the fund to support biodiesel projects and pointed to Article 9, which states that this violated another article in the same law.

Hifdzil Alim, a legal analyst from Gajah Mada University, said the rule unwittingly victimizes farmers.

"The fund comes from palm oil corporations. It doesn’t make sense to direct it back to them," he said.

"This is similar to transfer pricing and must be resisted because the farmers will become victims."

He said farmers who lack the capital, power and the means to directly market their products need assistance of this kind.

Bernardus Mohtar, a farmer from West Kalimantan, said they need fresh funds because they are facing difficulties in managing their plantations.

Moreover, their products are often shoddy and priced too cheaply, he said.

"Many palm oil farmers are so poor they can’t even send their children to school," he told ucanews.


ucanews

Readers choice: TOP-5 articles of the month by UkrAgroConsult