Indonesian Minister of Agriculture Decree on Companies´ Responsibility in Facilitating the Community Plantation Development

Published on February 11, 2022

With Good Growth Partnership support, a new regulation was enacted by the Indonesian Ministry of Agriculture in April 2021 that strengthens the legal umbrella to mandate that companies allocate and/or facilitate the establishment of community plantations on a total of 20 percent of their concessions. To overcome potential obstacles for implementation, alternative options are provided for companies to establish partnerships with the local community when land is unavailable for developing a new plantation, for example establishing Fresh Fruit Bunch (the raw material for palm oil mills) sale partnerships with independent smallholders near the company plantation. This regulation lays out the support that companies need to provide to smallholders and what types of actions they can select (such as offering access to financial support and knowledge in maintaining plantations, etc.) until the community plantation brings about a positive economic impact.

In the long run, enforcement of this regulation will increase the area of oil palm plantation owner by smallholders, secure market access for smallholders through smallholder Fresh Fruit Bunch sale to companies and access to higher-value market and ultimately allow an increase of smallholders livelihoods and capacity to produce more sustainably.