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Jakarta Post
The Jakarta Post
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Oil Palm Fund invests Rp 6.75 billion with smallholders

  • thejakartapost.com
    thejakartapost.com

    The Jakarta Post

Siak | Thu, April 21, 2016 | 03:15 pm
Oil Palm Fund invests Rp 6.75 billion with smallholders BPDP president director Bayu Krisnamurthi symbolically digs the soil for an oil palm seedling during the ceremony for the initial fund disbursement of the newly established agency in Siak, Riau, on 20 April. (thejakartapost.com/Rizal Harahap)

The Indonesian Oil Palm Estate Fund (BPDP) has invested Rp 6.75 billion (US$512,530) with 155 farmers to help them replant their plantations in Siak, Riau. The farmers are partners of palm oil producer Asian Agri.

BPDP president director Bayu Krisnamurti said that was the initial portion of funds to be disbursed by the institution as part of government efforts to support the sustainable palm oil industry. In the first phase of a multi-year program, the BPDP plans to spend Rp 52 billion to replant 2,100 hectares of palm plantations.

"Each farmer receives Rp 25 million per hectare. The money has been transferred to the receivers’ bank accounts," he said in remarks on Wednesday during the fund disbursement ceremony at the Mulus Jaya village unit cooperative (KUD).

The fund disbursement, he continued, had been quite easy and took only three months to process. He warned the farmers not to misuse the cash for other purposes and asked the KUD and banks to supervise the utilization of the funds.

In its program, the BPDP aims to help farmers replant a total of 100,000 hectares of oil palm plantations per year. The program is reserved for smallholder farmers with plantations  of less than 4 hectares. Those participating must join the KUD for replanting.

Mulus Rahayu KUD chair Pawito Saring said the grant was allocated to help replant 310 hectares of smallholder farmers’ plantations.

"Each farmer has previously taken out a 13-year loan from Bank Syariah Mandiri worth Rp 51 million to replant a hectare of plantation. With the [BPDP] fund disbursement, the farmers only need to repay Rp 26 million to the bank," he said.

During the ceremony, Krisna also signed a memorandum of understanding with three other cooperatives that are also partnering with Asian Agri.

Asian Agri managing director Kelvin Tio said the replanting was the corporation’s strategic program to maintain productivity in the long run. "We will keep supporting small farmers. Since 1987, the 29,000 farmers with a total plantation area of 60,000 hectares are significant partners for Asian Agri," he said.

This year, Asian Agri targets to replant 2,402 hectares of small farmers’ plantations in Riau. Next year, it eyes another 4,000 hectares. Asian Agri, owned by Indonesian tycoon Sukanto Tanoto, has been in the spotlight recently following tax evasion amounting to Rp4 trillion in 2012. (ags)

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