In October 2014, the Department of Agribusiness and the Faculty of Economics and Management at Bogor Agricultural University came together with the Indonesian Agricultural Economic Community (PERHEPI) to host a conference on the benefits of close ties between palm oil companies and smallholders. The experts at the conference lectured and led discussions on the theme “Partnership Programs between Palm Oil Companies with Smallholders to Increase National Income.” Many of the best practices they promoted are similar to those Asian Agri has maintained for more than 25 years.
The conference participants noted that the growth of Indonesia’s vital agricultural sector has been hampered by the poor conditions under which smallholders live, although the labor and dedication of these individuals contribute substantially to the nation’s economic development. Many smallholders experience economic discrimination, in that they are forced to accept prices for their products that are predetermined by brokers. In contrast, Indonesia’s palm oil production companies, including Asian Agri, have maintained strong partnerships with smallholders for the benefit of all stakeholders.
Asian Agri, one of the RGE Group of natural resources-development corporations under the direction of chairman and founder Sukanto Tanoto, has worked to develop positive plasma scheme partnerships with smallholders since the late 1980s. Like other progressive palm oil companies, Asian Agri provides agricultural, plantation management, and entrepreneurship training programs for its smallholders. In addition, Asian Agri’s emphasis on environmentally sound business practices led its team to offer premium payments in excess of $200,000 USD to its smallholders in Jambi and Riau Provinces who obtained certificates of sustainability.
Relationships with local village cooperatives, as well as with forward-thinking companies such as Asian Agri, have translated into profits and a higher standard of living for numerous Indonesian smallholders. The cooperatives regulate sales and promote proper agricultural techniques, enabling the farmers to generate a steady income stream each month. The Association of People’s Nucleus Company the Palm Oil Growers (AspekPIR) recently presented Asian Agri with an award in acknowledgement of the company’s efforts to improve the welfare of smallholders, particularly those working the land in Riau Province.
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