Abstract
One of the business models that has been developed in the palm oil plantations in Indonesia is the consolidation of the land of smallholders while professionally managed by cooperatives. While there are cooperatives that perform well, some are not so much resulting in the business cease. This chapter aims to analyze a smallholding palm oil business model that consolidates 367 smallholders with a land area of 734 ha in Srimulyo Village, Tungkal Jaya District, South Sumatra. The results of the analysis show that the cooperative in this village has performed well, and the palm oil land has had major productivity. Several factors are associated with the success of the palm oil smallholding business model, such as the trust from members, the cooperative initiatives, and the sustainability of the plantations. In the framework of developing sustainable plantations, this cooperative has received the RSPO certificate. At the same time, the smallholders have also been able to set up savings funds for replanting to be used during the time to rejuvenate plants.
TopBackground
Various models of palm oil business management in Indonesia have their respective strengths and weaknesses. In the overall models, cooperative managers play an important role in maintaining and developing palm oil. While proper plantation management has an impact on the welfare and sustainability of the palm oil business. Several research results indicate the important role of cooperatives in palm oil development in Indonesia (Rist, Feintrenie, &Levang, 2010; Jelsma, Slingerland, Giller&Bijman, 2017). Various challenges are also faced by the palm oil plantation business model, including technological advances, maintaining relationships with palm oil buying companies, and maintaining the sustainability of productivity. In the long term, they also have to prepare for replanting plants since the productive age of palm oil is only up to 25 years. After reaching that age, palm oil needs to be replanted so that it continues to produce well.
The success of the business model can be recognized from the business performance which can be observed from various perspectives. Mutasowifin, (2002) mentions several dimensions in the assessment of cooperative performance such as employee productivity, interrelationship, business networking, and implementation of training programs, innovation, community concern, business relations and transactions, and the existence of members.
Key Terms in this Chapter
Cooperative: An association that works together to run a business as a family to improve the welfare of its members. In managing a cooperative, its members can freely enter and leave the business entity.
Transmigrants: People who move from the island of Java-Bali to outside of the island of Java-Bali through what is called a transmigration program.
Idapertabun: Savings fund of the cooperative members that is paid monthly as a support fund for replanting plants once the plants reach the age of 25 years and over.
Free Daily Workers (Casual Workers): Workers who are recruited by the cooperative with a daily or piece-rate system. These workers are given wages according to the output produced.
Trust: The trust of certain parties to others in conducting transaction relationships based on a belief that the person whom they trust has all their obligations properly conducted as expected.
Business Sustainability: A strategy that prioritizes the long-term survival of a business while connected to the ecological, social, and cultural systems. Through this strategy, cooperatives can continue to exist and develop.