Minister of Agriculture Regulation (Permentan) No. 18 of 2021 — Facilitating the Development of Plantations for Surrounding Communities

Minister of Agriculture Regulation (Permentan) No. 18 of 2021, issued by the Ministry of Agriculture (Kementan), sets out the obligation of plantation companies, including oil palm companies, to facilitate the development of plantations for communities living around their operations. It implements Article 23 of Government Regulation (PP) No. 26 of 2021 on the Administration of the Agricultural Sector. For the palm oil industry, it defines the schemes, forms and stages of this facilitation, from initial socialisation through to partnerships with farmer groups or cooperatives of the surrounding community.

Key points

• Facilitation may take the form of credit schemes (programme or commercial credit), profit-sharing schemes, company grants, and/or other forms of partnership agreed by the parties.
• Companies must provide financing for productive plantation activities at least equal to the optimum production value of a plantation covering 20% of the total plantation area they cultivate. The optimum value is set periodically by the Director General of Plantations.
• Partnerships may cover the upstream, cultivation, downstream and support subsystems, crop replanting, and the use of oil palm by-products such as biomass, liquid waste (effluent), kernel cake and palm shells.
• Company grants to communities are not treated as debt and are not counted as partnership costs or as part of the company's corporate social and environmental responsibility.
• Socialisation of the facilitation plan must take place no later than 90 working days after the company's cultivation rights title (HGU) is issued, and a report on the results must be submitted to the business-licence issuer no later than 14 working days after the activity.
• The facilitation stages cover preparation (socialisation, identification of prospective land and prospective growers, grower institutions, administrative requirements, designation and cooperation agreements) through to implementation.

Who it affects

Plantation companies, including oil palm companies, and the farmer groups and cooperatives of communities around their plantations.