Company: PT Astra Agro Lestari Tbk.
Country: Indonesia
Project Name: Enhancing Community Welfare through Sustainable Income Generating Activities
Category: Poverty
Website:
Objective:
The project aimed to assist the community in becoming a partner of the company in the future.
Details of the project:
The program to improve community welfare contributed by the PT Gunung Sejahtera Ibu Pertiwi subsidiaries of Astra Agro Lestari, Tbk- (the Company) reflected the foundation and philosophy of the Astra group: to become an asset of the nation. The company believed that community development was an effort to improve the living conditions of the surrounding communities by optimizing their initiatives. While the community’s participation was the main key for a successful community development program, its willingness to participate depended on the relevance of the programs and initiatives to its needs. Thus, an accurate understanding of these needs was not only significant but also crucial.
The company, through its CD officers, found that the communities surrounding the plantations had yet to maximize their resources and their potential. Some of the farmers planted crops such corn, rice, soya bean, cucumber, etc. for their everyday needs, but showed a desire to raise palm oil in pursuit of better welfare. As they apparently had little experience, funds, and knowledge in obtaining seeds and cultivating palm oil effectively, the company decided to carry out the IGA program.
The farmers were given low-interest loans for which they could commence repayments a year after their farms began their first harvest, with the company entering a purchase guarantee agreement for the crops. The company also assisted the farmers in getting additional loans to cover their expenditures during the cultivation period.
The program was jointly run with the community and the government. The community formed farming groups which supplied documents required by the company: personal or family documents such as identification letters, land certificates, and a cooperation contract with the company. For its part, government was tasked with verifying the documents and issuing recommendations. Upon the completion and approval of their submitted requirements, the participants received the seeds from the company. The cultivation was done by the community under the supervision of personnel assigned by the company, whose CD officers also actively guided and helped take care of the plantations. After two to three years, the trees could be harvested and a portion of the proceeds used to partially repay the loan.
In 2003, PT Gunung Sejahtera Ibu Pertiwi began implementing the IGA scheme in cooperation with the Kotawaringin Barat Regency government and distributed palm oil seeds to 32 households. In 2006, the participants began to enjoy improved incomes and completed their loan repayments by 2007. As a result, the Company expanded IGA programs in 2008 to another 215 households.
The participants of the expanded IGA scheme with PT GSIP were currently waiting for the trees to produce. The company continuously monitored the progress of the plantations and gave guidance, as needed. To improve monitoring, the company graded each farmer’s plantation in March 2009 to check the conditions thereat. It recommended steps for each plantation to further improve. All the farmers were expected to be able to harvest their palm oil in 1 to 2 years.
The IGA programs enhanced the farmers' asset base through land value improvements because of the transformation of their lands into palm oil plantations. In 2001, an empty plot of land in the regency was valued at only Rp 500,000 per hectare. In 2008, the value was Rp3,000,000 per hectare--this in addition to the sustainable income enjoyed from the productive asset.
The most notable achievement of the IGA Program was the great number of participants who worked both independently and together in clearing and preparing the land, and attended to the plantations until harvesting. This scheme boosted their confidence, care, and respect for their own palm oil plantations, and reduced the likelihood of their neglecting or selling their plantations to other parties.