Palm oil is Indonesia’s main plantation commodity and it is the largest source of foreign exchange after petroleum and natural gas, reaching IDR 265 trillion (US$16.9 billion) in 2018. Indonesia is the largest producer and exporter of palm oil in the world, with production exceeding 51 million tonnes in 2019 (83% crude palm oil, 17% palm kernel oil), from almost 15 million hectares, 55% being large private estates, 41% smallholder estates and 4% large government-owner estates. The has been a massive increase in smallholder estates from only 3,000 ha in 1979 to almost 6 million ha by 2019, shows that the success of oil palm in improving the Indonesian economy is in part thanks to independent smallholders. Unfortunately, the vast area of smallholder oil palm estate is not the most productive, with average oil palm production in smallholder plantations in Indonesia in 2019 being 3.2 t/ ha and in Ketapang Regency only 2.1 t/ha, compared to 4.1 t/ha from private estates and 3.7 t /ha on government estates. Smallholder oil palm plantations are also very vulnerable to various environmental, social and legal issues that can limit access to international markets.
This report might be used as a reference for government, private sectors and CSOs as a basis to develop interventions strategies to capacitate oil palm smallholders. With a forecast that over the next decade oil palm smallholders will double their production pie to the total share of oil palm production in Indonesia, the contribution of government, private sector and CSOs in capacity improvement will never be meaningless.