We would like to advise our key stakeholders that an investigative journalism initiative, the Gecko Project, will publish an article about GAR and our plasma implementation efforts. GAR has been cooperating with the Gecko Project since late-2021, when they requested data and posed questions to GAR for their report. As a result, GAR submitted at least three written responses and arranged one virtual meeting with a senior leader from our plantation operations.
Despite our engagement, we still expect the Gecko Project to be critical of our efforts in realising our commitment to smallholder plasma fulfilment. Although GAR has achieved a ratio of 21 percent of the total managed area at the group level, GAR has some outstanding plasma obligations.
We expect Gecko to point out that seven palm oil plantations are still in progress to fulfil the legally mandated minimum 20 percent of plasma. Therefore, to provide our stakeholders with a balanced view of the situation regarding plasma fulfilment, we would like to clarify the process, highlight the challenges and promote good practices.
1. The implementation of smallholder plasma is a long and complex process
The Ministry of Agriculture Regulation No. 18 of 2021 outlines the seven regulatory steps to reach a partnership agreement to establish a plasma plantation (see the box below). These steps may appear straightforward, but they are anything but.
First, the three key stakeholders – the smallholder cooperative, the relevant government authority and the company – must sign off on each step, i.e. decisions are unanimous.
Second, each step can only proceed when the enabling conditions are in place. For example, all smallholders must organise themselves into a legal cooperative. Each smallholder must possess a legal title to their land parcel. The parcels’ locations must be concentrated to reduce costs in infrastructure and operations, and the intended land area must comply with local and national land-use planning.
Finally, two additional processes must be managed alongside the regulatory process. First, the smallholder cooperative must sign a credit agreement with a local bank to finance the land preparation and the planting. The company must also conduct environmental and social assessments and comply with the requirements of sustainability certification schemes, such as the Indonesian Sustainable Palm Oil (ISPO) and the Roundtable for Sustainable Palm Oil (RSPO).
The Gecko Project wrongly promotes the perception that the smallholder’s community is waiting for the company to develop the plasma smallholders plantation. On the contrary, the community and the government are participants and decision-makers alongside us in the plasma journey. The company can only and will only act when the other two parties give us consent.
Suppose there is insufficient land to build a plasma area. In that case, different partnerships with the community that bring positive impacts and generate income can be offered as a replacement for plasma development. This alternative must have the consent of the community and the local government.
2. We invest in good practices to address bottlenecks and mitigate risks
GAR is continuously learning from past experiences, improving and innovating good practices. These have helped increase our aggregate plasma percentage to 21 percent of the total managed area today.
For example, to address land legality and accelerate sustainability compliance, we have proactively implemented Participatory Mapping in 63 villages. These communities are helped to map their land resources with technical support from GAR under the supervision of the local government.
Where communities maintain their own ageing palm trees, we supply certified high yield seedlings and technical assistance for replanting under the government’s Smallholders Replanting Programme (“Peremajaan Sawit Rakyat”).
Finally, suppose the smallholder cooperative needs more money to cover unexpected operational expenses. In that case, we can and have arranged for a bridging loan (“Dana Talangan”). If smallholders urgently need cash due to low yield and low market prices, we can and have arranged for a cash allowance (“Amprah”).
3. Plasma success is equally important for the company as well as the community
Beyond legal compliance, GAR is fully aware of the communities’ expectation to benefit financially from plantation development on their lands. In many of our subsidiary companies, we have, in fact, achieved a plasma percentage higher than the 20 percent mandate.
Additionally, we invest in Bright Future Initiative programmes such as alternative livelihoods. For example, community members save money by growing their own food crops or developing additional income by learning a craft or producing cash crops.
To conclude, GAR’s journey to fulfil the 20 percent plasma mandate for the outstanding seven subsidiaries still has some way to go. We invest in good practices to speed up the process while supporting the community in this journey, where and when we can. Stakeholders can track our overall plasma development progress in our annual sustainability report. We have also prepared a short brief on the plasma development challenges that is available upon request.
For more information, please contact:
Head of Policy and Partnership