Asian Agri, founded by Sukanto Tanoto, has involved plasma farmers and independent farmers in its oil palm plantations since the start of its operations 27 years ago.
On 2 October 2013 a new ministerial regulation came into effect which required palm oil companies to allocate a minimum of 20% of their plantations to plasma farmers.
Of the 160 000 hectare oil palm plantation area currently in use by Asian Agri, 60 000 hectares are reported to be run by plasma farmers, which is roughly 40%. Although it has already met the local government’s requirements for the amount of plasma farmers needing to be involved in the business, the company would like to eventually increase this amount to 60%.
About Plasma farming
Plasma Farmers are smallholders who have an exclusive supply agreement with a mill, and in return receive technical and financial assistance as well as agricultural training from the mill. These smallholders are more likely to meet required sustainability standards than independent smallholders.
Plasma Farming Production
Because of Asian Agri’s use of a higher yielding palm oil plant variety, they are able to increase their production. The Plasma farmers are on route to produce 7.5 to 8 tons of crude palm oil per hectare, which is a large increase from the 5 to 6 tons per hectare produced previously, and is vastly higher than production estimates of 1 to 2 tons per hectare from plasma and independent farmers for other companies.
On 21 December 2016, a premium of over 2.6 billion Rp (US$ 195 000) was handed over by the Director of Asian Agri, Freddie Widjaja, to six members from the Village Unit Cooperatives association in Jakarta for the plasma farmers in the Riau and Jambi provinces. These funds are an incentive from the sales of sustainable palm oil produced by the plasma farmers during 2015, and will be distributed by the Village Unit Cooperatives association members amongst the 29 000 plasma farmers in these districts.
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