Lessons Learned from Asian Agri's Smallholder Partnership Model

INTRODUCTION

Indonesia’s vast biodiversity offers unique benefits for the improvement of the people’s welfare, including the palm oil sector development. Currently, palm oil is one of the national economy’s strategic commodities. From upstream to downstream, the palm oil industry has greatly contributed to employment creation, poverty eradication, regional economic development, and export and foreign exchange reserve increase.

The great contribution of palm oil as an economic commodity today did not happen overnight. The growth of palm oil into one of the leading sectors in Indonesia was a long process. Such a long process includes the success of plasma core partnerships in oil palm plantations, which allows both industry and smallholders to enjoy the robust palm oil business today. Due to the partnership’s success, oil palm estates play a strategic role in the creation of employment opportunities and improvement of smallholders’ welfare. The plasma core partnership supports the welfare of smallholders and the fulfillment of raw materials.

The cooperation dynamics in a plasma core partnership scheme is inseparable from the economic fluctuation in Indonesia. However, smallholder partnerships in oil palm estates has proven to be beneficial in different economic conditions. This shows that partnership cooperation is able to withstand economic fluctuation.

To say that oil palm estate partnership is the right cooperation model for the agriculture sector is not an exaggeration. Therefore, we see the urgent need to share the success stories of smallholder partnerships in oil palm estates in a book to inspire smallholders and policy-makers to support partnership development in the management of Indonesia’s biodiversity.

We hope that this book will be adopted and expanded on by other sectors in the effort to develop smallholder partnerships.

The book Developing Smallholder Partnerships: Lessons Learned from Asian Agri’s Smallholder Partnership Model is divided into five chapters. Chapter 1 The Contribution of Palm Oil for Smallholders and the National Economy describes a number of benefits of palm oil for smallholders in improving welfare and the contribution of palm oil in the context of macroeconomics, such as export and foreign exchange reserve contribution, labor absorption, poverty eradication, raw materials for industry and added value creation, even distribution of regional economic development, and state revenue.

Chapter 2 Smallholder Company Partnership in the Palm Oil Industry elaborates on the various partnership benefits for smallholders as well as palm oil companies. This chapter also describes the role of agricultural partnerships from the angle of institutional economy from certainty, trust, to social capital generation through partnerships between smallholders and palm oil companies. This chapter concludes with a description of smallholder partnerships in Asian Agri.

Chapter 3 Partnership and Sustainable Agricultural Practices outlines knowledge transfer practices in partnerships with the multiplier effect of transfer from smallholder partners who have successfully developed palm oil to their workers, instead of one way from the palm oil industry (Asian Agri) to the smallholder partners with the hope of simultaneous growth smallholder. This chapter also illustrates the important role of mentoring in ensuring knowledge transfer in the management of sustainable oil palm estates. This chapter concludes with an illustration of the Fire Free Villages and biogas electricity production program, as an inseparable part of the efforts for sustainable palm oil practices.

Chapter 4 Partnership in Palm Oil Business: A Learning Model outlines the lessons learned in case studies of smallholder partnerships in Asian Agri as a successful palm oil business partnership model. This chapter also describes the dynamics and variations in the way companies engage smallholders in collective partnerships.

Chapter 5 Conclusion: Keys to Partnership Development concludes the book with the discussion on the urgency to highlight the oil palm estate partnership model to the public to inspire smallholders and policy-makers to support partnership development between smallholders and companies in managing biodiversity in Indonesia. The last chapter concludes at least three main factors enabling partnerships to generate positive impact for the industry or smallholder partners, which are social capital, strong institutionalization of smallholders, and collective action in smallholder communities.