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Govt tightens rules on palm oil firms’ mandatory land allocation for smallholders
New rules require firms to give 20 percent of their land to smallholders before the government extends their permits.
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Full load: A worker collects palm oil seeds at the Namorambe plantation in Deli Serdang, North Sumatra, on May 12, 2022. (AFP/Andi)
T
he government is tightening regulations on right-to-cultivate (HGU) permits for oil palm plantations, requiring applicants to allocate 20 percent of their land to local smallholders before their permits get extended, a requirement which previously could be fulfilled afterward.
Authorities are also enforcing stricter oversight in selecting smallholders to manage these allocated areas. Agrarian and Spatial Planning Minister Nusron Wahid noted that many plantation firms have handed over the land to cooperatives controlled by their own employees, effectively keeping the land within corporate hands.
“This is unsatisfactory because, at the end of the day, these employees still work for the company, rather than being independent farmers,” Nusron said during a meeting with the House of Representatives Commission II, which oversees home and land affairs, on Thursday. “We want these areas to be truly managed by local smallholders.”
Oil palm plantations can apply for HGU permits for an initial 35-year concession then extend it for another 25 years.
Plantations can apply for an additional 35 year extension, but would be required to allocate 30 percent of their land to local smallholders, up from the previous 20 percent. Nusron stated that this adjustment would allow more local farmers to benefit from managing oil palm plantations.
“Businesspeople holding HGU permits might not be happy with this regulation. But without it, 16 million hectares of existing oil palm plantations would remain dominated by those groups of companies,” he said.
Beyond just managing their own plots, Nusron also envisioned those smallholders becoming integrated into the broader supply chain of the plantations, such as taking part in logistics or fertilizer procurement.
