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convertible production forest becoming production forest. Local governments also need to revisit the land licensing process. Lands that have been allocated for palm oil plantations but
still covered by forest and no HGUs are issued, may need to be suspended and cancelled.
C. Delivery Mechanism
For delivering the proposals to be implementation, stakeholder mapping, implementation schedule and enabling conditions need to be assessed. The following sections described briefly these issues.
Stakeholder Mapping
For implementing the land swap, and improve yield, the stakeholders that will need to be involved are the following:
1. Land swaps scenarios. The key stakeholders for implementing this scenario are Ministry of
Forestry, and local governments. To change the status of forest function from HP to HPK swapping of non-forested land in HP and forested lands in HPK will involve mainly the
ministry of forestry as both lands located in forest areas. By changing the function of the forested lands in HPK to HP, this land will not be allowed anymore to be released to local
governments to meet the land demand in the future. However, swapping of forested land in APL and non-forested lands in HP will involve local government and Ministry of Forestry.
The implication of this scenario is the need to have further revision of the current proposed RTRW which is still under the process of approval from Parliament. Probably worth noting
the local populations that live on or depend on the non-forested land, and the NGOs that can help with the Free Prior and Informed Consent.
2. Improved Yield Scenario. The key stakeholder for this scenario will be independent farmers,
plasma farmers, palm oil companies, palm oil associations e.g. APKASINDO and ASPEKSPIR
, local governments, research agencies, seed suppliers, and financial institutions. The extension services and research agencies will play significant role in
increasing productivity of farmers’ plantation, through introduction of better crop management technologies. Supply of certificate seedlings should be enough to meet the
farmers’ demand. Access to credit from financial institutions is also required as using the certificate seeds and improved crop management will increase the cost see Chapter 2 for
detail.
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3. Save all forested lands scenario. All stakeholders from the two above scenarios.
Implementation schedule
For the implementation of the three alternative land use scenarios, key activities will include the change of forest function, conservation of forested land in APL licensed and non-licensed and
determination of target area for yield improvement programs Table 3.10. The change of forest function is crucial to ensure that the swap of forested land in HPK to HP and conservation of
forested land in APL will not reduce the total area of lands that have been allocated for palm oil. Based on the discussion with the Head of Economic Division of Central Kalimantan Province, in
practice it will be difficult to release non forested HP for palm oil plantation unless the status of HP production forest is changed to HPK convertible production forest. Similarly to ensure
that forested lands in HPK will not be requested by local government to be released for palm oil plantation, the status of forested land in HPK should be changed to HP.
Table 3.10. Key activities and area of the targeted lands for the implementation of the three alternative land use scenarios
Key Activities Land
swaps Improved
Yield All
forested lands
saved Implemen-
tation schedule
Leading Agencies
1. Change status of non forested land in HP to HPK and assess
the feasibility for palm oil development
240,949 240,949
240,949 2012-2014
Ministry of Forestry
2. Change status of forested land in HPK to HP
75,025 75,025
75,025 2012-2014
Ministry of Forestry
3. Determine targeted areas for yield improvement program
- 928,396
925,863 2012-2013
Local Governments
4. Determine non-licensed forested lands in APL for
conservation 45,525
45,525 45,525
2012-2014 Local
Governments 5. Determine licensed forested
lands in APL for conservation 120,400
352,475 896,524
2012-2013 Local
Governments 6. Total Forested Land being
saved 2+4+5 240,494
473,024 1,017,073
Changing the status of forested land in HPK with non-forested land in HP also face challenges. Many of non-forested land in forest area are occupied or used by communities. Giving these
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lands to other parties such as company always create the social conflict. Some companies left their lands unplanted due to high social cost. Current policy of Provincial Government for
limiting the issuance of new land use right to big companies is very appropriate. Coupling this policy with the new Minister of Agriculture Regulation on Indonesian Sustainable Palm Oil or
ISPO No. 19PermentanOT.14032011 will be perfectly matched
27
. ISPO obliges all oil palm companies including the existing ones to establish plasma plantation with size of at least
30 of their concession areas. Targeting the communities who used the non-forested lands in HP that will be changed to HPK for plasma plantation will create good synergy between these
two policies. As shown in Table 1.1, total of palm oil plantation in Central Kalimantan already reached 1.5
million ha. At present, most of the companies have not met their obligation in establishing plasma plantation. All lands are already used by the companies. As ISPO is mandatory, these
companies will need to find additional lands for establishment of plasma plantation. Following the Minister of Agriculture Regulation that minimum area for plasma is 30 of the concession
areas, it is estimated that the additional lands required will be about 450,000 ha. This size is almost similar to the total non-forested land available for palm oil in APL and HPK see Table
3.8. Process for the implementation of the land swap policies can be summarized in Figure 3.7. Determination of targeted area for yield improvement program is also important for assisting
local government in prioritizing location for the establishment of forest management unit FMU. It is very likely that the increases in productivity may result in further encroachment into forests
enabled by additional capital and incentivized by additional profitability. The presence of FMU in area being targeted for yield improvement can increase monitoring and enforcement
capacity of forest frontier. Determination of licensed and non-licensed forested land in APL for forest conservation will assist the local government in revising its spatial plan RTRWP and
27
ISPO will be officially effective as of March 2012 and it is targeted that all oil palm plantation companies will obtain the ISPO certificates by 2014
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synchronizing it with the change of the forest function through ‘Padu Serasi’ process
28
. It is very important to note that this study indicated that there are quite significant forested lands that
have been allocated for palm oil plantation in APL are not suitable for palm oil see Table 3.8. These forested lands should be the main target for the implementation of the all forested land
saved scenario.
Figure 3.7. Process of the implementation of land swap policy and its connection with establishment of plasma plantation
The presence of FMU would be instrumental in managing risk of increasing threat on forested land due to the productivity improvement. Depending on capacity of FMU, the roles of FMU
among others in this context is to facilitate the process of establishing clear boundary between forest area and lands allocated for communities in establishing the palm oil plantation see Figure
3.7. Kartodihardjo et al. 2011 suggested that FMU should involve actively in i localizing all areas of serious tenurial conflict into areas of non-effective production as a transitional policy,
and gradually building a collaboration to optimize achievement of sustainable management of land and forest resource objectives, ii developing micro spatial arrangements together with the
28
Padu Serasi is a process to synchronize between spatial plan of local governments and forest function as mandated by Article 18 Act Number 262007 about spatial plan. This is to meet accumulating demands from local governments throughout country
for further release of forest land for alternative land uses. HP
HPK APL
Forested Non-Forested
Forested Non-Forested
Small holder Big company
30 +450,000 ha 70
Small holder Big company
30 70
Non-Forested Forested
- Enabling condition SKB - Up front payment
- Clear boundary
Companies that already planted their lands for plantation may require additional land for Plasma.
Before ISPO, most companies do not meet obligation to establish plasma
Land allocated for palm oil companies reach 3.2 Mha and
already planted 1.5 Mha Area targeted for
Plasma plantation
Collaboration between MoF, and
MoA and Local Governments
Empowerment programs: small
holder training Existing
Planned
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community in order to reach mutual agreement with the community on the utilization norms for each spatial function, iii developing a mechanism for recognizing community management
rights in areas of minor tenurial conflict and use the mechanism as the basis for FMU managers to prepare licensing recommendations for communities.
Enabling Conditions
Based on a study conducted by Sekala in Kapuas Hulu District Muliastra and Sudana, 2012, there are two approaches that can be followed in implementing land swap policy. The two
approaches were developed based on the discussion made by Sekala with BAPLAN from Mei to Agustus 2009. The first approach is through the revision of spatial plan RTWR of Districts and
Provices, and second approach is through Forest Minister Decree Number 292Kpts- II1995 about exchange of forest function which has been revised a number of times and the latest one
Forest Minister Decree Number P.16 Menhut-II2009. However, the implementation of this policy will be very costly. The official cost
29
for exchanging forest function is estimated to be
about 3.4 billion IDR about 375 thousand USD for every 12,000 ha Table 3.11. However, in
practices the unofficial cost
30
is much higher and this become the main barriers for implementing this policy.
Table 3.11. Cost for exchanging status of forest function
Muliastra and Sudana, 2012
No Description of expenses Cost IDR
1 Preparation of draft for proposing exchange of forest function 518,479,000
2 Development of forest boundaries by committee including cost for finding the substitute land to replace the swap land
2,119,932,690 3 Evaluation of legal and technical aspects of the land swap by Ecelon 1 at the
Ministry of Forestry and the preparation of Minister of Forestry Decree and map scale of 1:100.000
40,512,000 4 Payment for the land swap by the proponent
693,083,000 5 Cost for the issuing the Minister Decree including the annexes
40,512,000 Total
3,412,518,690
29
Official costs are needed for re- area arra ge e t “tata atas’ , appi g, site visit, oordi atio , o fli t
resolution, etc.
30
Unofficial costs are usually dealing with compensation for people who occupied the area.
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Currently, the proposal for changing the forest function comes from companies who have used forest areas but do not match with its functions or from local governments who need more forest
area to be allocated as convertible production forest. In the future the Ministry of Forestry through FMU may take over the process of exchanging forest function. Referring to Table 3.11,
the highest expense is for development of forest boundary. With the involvement of FMU in this process, the cost for the developing the boundaries may decrease.
For the implementation of the yield improvement scenario, the enabling conditions that should be in place are the availability of certificated seeds for small farmers, extension services and
access to financial sources allowing farmers to improve their crop management practices. There are a number of financial mechanisms has been developed for supporting palm oil plantation
development in Indonesia. Some of the financing mechanism options and the status of their
implementation are presented in Table 3.12. Local government should optimize the use these financing mechanism in supporting communities in establishing sustainable palm oil.
Table 3.12. Implementation of financing mechanism options
Financing mechanism options Implementation
1. Regular capital Has been applied.
2. Grants NA
3. Loans a. Gestation period
b. Lower interest rate a. Has been applied four years gestation period.
b. Has been applied, particularly for smallholders under oil-palm plantation revitalization program interest
rate 5 per year. 4. Provision of inputs
Has been applied in the “plasma-nucleus” scheme. 5. Provision of free extension services
Has been applied, needs increasing quality and quantity of extension workers.
6. Risk guarantees NA, technically for credit scheme risks are taken by
Bank 7. Guarantees of purchase
Has been applied in the “plasma-nucleus” scheme. 8. Differentiated pricing
Lack of demand for premium price, no significant price differentiation at recent situation.
9. Certification schemes Has been applied voluntary RSPO and mandatory
ISPO. 10. Company commitments
Mandatory for ISPO
In addition, there are also a number of initiatives that can support the yield improvement program. Among others, the Smallholder Acceleration and REDD+ Partnership SHARP,
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initiated by Sime Darby, is a multi-stakeholder grouping that works with the private sector to support smallholders with the triple goal of improving rural livelihoods, increasing yields and
reducing deforestation. The Partnership on Indonesian Sustainable Agriculture PISAgro is an alliance of companies collaborating to improve the productivity and quality of different
commodities, with special attention to environmental sustainability and the expansion of opportunities for smallholder farmers. Sinar Mas is leading the palm oil PISAgro working group.
D. Scalability assessment
