Jakarta. The government is nudging state-owned plantation company Agrinas Palma Nusantara to copy how FELDA Malaysia manages its palm oil ecosystem.

FELDA Malaysia is the federal land development agency that is in charge of organizing smallholder farms growing cash crops. Cooperatives Minister Ferry Juliantono wants Indonesian businesses, including Agrinas, to take a look at FELDA as a reference.

He proposed the idea of consolidating smallholders and farmers via cooperatives. This way, farmers can gain a stronger position within the palm oil value chain, while integrating them into the trading and processing activities.

According to Ferry, Malaysia’s palm oil exports did not differ much from Indonesia's despite the yawning gap in plantation sizes. Malaysian palm oil plantations are only a quarter of those of Indonesia.

“This shows a difference in management,” Ferry was quoted as saying by the state news agency Antara.

“Building such an ecosystem [with cooperatives] can enable large-scale palm oil sales,” Ferry said, while adding this would bring added value for the farmers.

The government has instructed Agrinas to manage palm oil plantations seized in the crackdown on illegally cleared forest areas. Agrinas is also required to set aside at least 20% of its land for smallholder plots. Agrinas Palma Nusantara boss Mohammad Abdul Ghani said that the company was looking to partner with cooperatives to meet the requirement.

“We will prioritize local cooperatives around our site as vendors for plant maintenance, harvesting, and other activities. Given the vast area that we manage, cooperatives will be a key partner in supporting palm oil processing and food security,” Ghani said.

Smallholders make up 43% of Indonesia’s palm oil plantations. Large companies account for 54%, while the remaining 3% are state plantations.

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