Oil palms become less productive with age, resulting in significantly smaller yields when they turn 25 years old, and therefore decreased income for oil palm smallholder farmers.
Consequently, smallholder farmers have to engage in a replanting process, where they replace their old palm trees with new trees.
However, new palm trees take about four to five years before they start producing any fruit, meaning that the farmers’ incomes from palm oil farming will cease during this period.
Fear of losing this revenue leads some smallholders to delay the replanting process, resulting in continuously declining yields and a lower income.
Since 2016, Asian Agri has extended help to smallholders in Indonesia through their respective cooperatives, contributing to Indonesia’s Oil Palm Plantation Replanting Program in the process.
The government program, which kicked off in 2017, aims to boost domestic crude palm oil production through the replanting of existing smallholder oil palm plantations, without the need to clear additional land for new oil palm plantations.
Asian Agri aids its smallholder partners during the oil palm replanting in various ways. Besides helping the smallholders to first locate banks in Indonesia which are willing to fund their replanting, Asian Agri also acts as a guarantor on behalf of the smallholders to obtain loans.
Asian Agri then assists the smallholders during the replanting process itself, providing them with its superior Topaz seeds (renowned for their high yield capabilities) and assisting them in the management of their farms, until their debts are repaid to the banks.
The company also helps the smallholders to obtain assistance from government body BPDPKS (Indonesian Oil Palm Estate Fund Agency).
In addition, Asian Agri provides the smallholders with new sources of livelihood, such as plant seeds, cattle, poultry and fish, and trains them on how to use these resources. The results are then sold to provide alternative incomes during the replanting period.
To date, Asian Agri has jointly carried out the replanting program with 123 smallholders of the Mulus Rahayu Cooperative (covering 310ha) and 204 smallholders of the Bina Usaha Baru Cooperative (covering 472 ha).
