Financial literacy and agricultural training for Indonesian oil palm smallholders

Palm oil is expanding rapidly in West Kalimantan and increasingly rubber farmers are switching to the more profitable oil palm crop. In January 2012 Solidaridad launched a pilot training project in partnership with World Education and Credit Union Keling Kumang (CUKK), to make smallholder oil palm fruit production more sustainable.

Palm oil production in Indonesia has been an important agent of development and it is a major source of employment and economic activity, but is also associated with deforestation, pollution and land rights conflicts. Many local communities oppose the expansion of industrial palm oil estates in West Kalimantan, but at the same time see opportunities in planting oil palms on their smallholdings.

Solidaridad works with Indonesia’s biggest Credit Union, Keling Kumang (CUKK), whose members’ main income source is smallholder agricultural activities. About 14,000 CUKK members provide palm fruit bunches to oil mills in Sanggau, Sekadau and Sintang districts in West Kalimantan. The project addresses two main challenges: how to increase productivity without negative social and environmental impacts and how to sell oil palm fresh fruit bunches (FFB) more profitably.

Solidaridad brings agronomic and sustainability expertise to the farmers. World Education, an Australian-Indonesian non-for-profit organisation, provides adult education in financial literacy so that additional income earned is well spent.

Solidaridad and partners empower CUKK members

Many farmers lack the technical ability to manage their oil palm crop, which is new to most of them. Credit Union staff, Solidaridad and World Education work together, to empower Credit Union members to adopt sustainable practices.

To improve agriculture, a number of Farmer Field Schools (FFS) have been set up where farmers learn about palm oil production, agro ecosystems, and seeds and how to apply fertilizers and when to harvest. Solidaridad has helped recruit trainers and develop a curriculum that is in line with RSPO and ISPO requirements. The FFS tends quarterly meetings for a first group of 190 regular attendees, who are distributed into 5 different groups of smallholders. Farmers have expressed great appreciation for the farmer field schools, and implementation of better agricultural practices.

World Education helps to improve the business skills of farmers. This includes setting up internal control systems and the improvement of financial literacy levels among smallholders to prepare for RSPO and ISPO (Indonesia Sustainable Palm Oil) certification in the future. Business skills training include accounting, business management, legal issues and general bargaining skills.

CUKK management is keen on increasing the number of farmers in the training programme to 2,000 in the years ahead and scale the pilot across west Kalimantan. Keling Kumang has over 14,000 oil palm smallholder members, and the potential to develop a complete oil palm training system for smallholders is immense.

“I really appreciate the farmer field school that has been carried out to date. For the first time, we have been given information about how the oil palm mill sorts and grades oil palm fruit. We have a manual and pictures, and real fruit examples of what is a good quality oil palm fruit,” said Oil palm farmer, Sekadau, of West Kalimantan.

Updated on March 20, 2014 embedding video from