Village cooperative

Jakarta (ANTARA) - The village-based Sejahtera Cooperative in Musi Banyuasin District, South Sumatra, has taken a more visionary path than most Indonesian oil palm farmers who typically supply companies with fresh fruit bunches (FFB).

shifts from raw fruit sales to CPO production

Refusing to remain mere suppliers, the cooperative established its own crude palm oil (CPO) processing facility capable of handling 45 metric tons of FFB per hour. Cooperative Minister Ferry Juliantono inaugurated the plant on Aug. 12, echoing government support for the revival of Indonesian cooperatives.

Thamrin, chair of the Sejahtera Cooperative, said the factory embodies members’ shared dream of gaining a stronger foothold in the agriculture sector.

The cooperative’s palm replanting program in 2018–2019 planted the seed for a bigger ambition. By 2023, that vision materialized into the construction of the CPO facility, a project valued at Rp100 billion, or about US$5.6 million.

The funding story reflected the Sejahtera Cooperative’s communal spirit. Bank loans formed the backbone, while members, allied businesses, and local residents pooled capital.

With the long-awaited factory now operational, the cooperative has begun to reap greater gains from a new stream of income, Thamrin said, underscoring how the venture is expanding earnings for many smallholders.

“Member farmers now enjoy two sources of benefits: proceeds from fresh fruit bunches and dividends,” he explained.

In the spirit of self-reliance and community empowerment, the factory now sources FFBs directly from 3,074 hectares of plantation owned by 1,536 member farmers.

The Sejahtera Cooperative estimates annual dividends of around Rp12 billion (over US$677,000) from the plant’s yields. That figure will not be the only pool of earnings for members, as they remain entitled to the cooperative’s business surplus distribution as well.

To make sure that everyone wins, the cooperative is committed to purchasing farmers’ yields at the reference price set by the local government while also opening its doors to contributions from non-member cultivators in surrounding areas.

As the CPO plant is still in its early days, the cooperative’s export aspiration remains a vision. That said, CPO trade will be anchored in partnerships with industries at home.

Added values

The birth of the Sejahtera Cooperative’s CPO factory has sparked new hope for growth among member farmers.

Ahmad Khoirun, 53, shared his story. He has been part of the cooperative for 23 years, relying on the rural cooperative to make the most of the two-hectare plantation he treasures.

The farmer recalled that Sejahtera had gone through cycles in its business model, beginning with a period when the cooperative joined hands with a private firm to tap into the plantations it sustained.

Following a planting and management overhaul, the cooperative chose to take matters into its own hands. Today, FFBs cultivated by member farmers are channeled directly to its own CPO plant.

Thanks to the new model, Ahmad now earns more than Rp12 million (around US$677) each month from his plantation alone, with the promise of additional income from surplus shares.

Setting the CPO factory in motion offers farmers benefits beyond guaranteed markets for their yields. The cooperative insists the facility is inclusive, even for smallholders who depend on vehicles with a capacity of less than three tons.

On top of that, the freshly launched site runs largely on the labor of nearby folks, including relatives of member farmers. This strong faith in communal growth has practically turned the factory into a catalyst for a rural economy.

It is safe to say that owning a CPO plant is a landmark leap for the Sejahtera Cooperative, placing its foothold even deeper in Indonesia’s natural downstreaming agenda, which seeks greater added value from processed commodities.

While the cooperative has advanced into processing, its main production arm has yet to move beyond extracting CPO from FFBs. Chairman Thamrin admitted that greater capital would be needed to progress into higher-value products such as cooking oil.

That obstacle, however, has not kept Sejahtera from squeezing byproducts out of its factory—compost from empty bunches, biochar from shells, and biogas from liquid waste.

Setting an example

The model adopted by Sejahtera has proven worth noting, so much so that Cooperatives Minister Ferry Juliantono described it as paving the way for cooperatives nationwide to dare play a bigger role in the palm oil industry.

Juliantono urged more cooperatives to follow Sejahtera’s footsteps, moving beyond FFB trade by erecting their own facilities to process raw yields into commodities with higher added value.

According to Cooperative Ministry records, Indonesia is home to 222,462 cooperatives scattered across its islands, with 30,817 classified as producers and 2,587 relying on plantations.

Meanwhile, the Agriculture Ministry noted that Indonesia had 16.83 million hectares of palm oil plantations in 2024. Smallholders cultivated 41 percent of the total, while major private companies accounted for 51 percent, state-run firms 3 percent, and the remaining 5 percent were unconfirmed.

Given the significant share held by smallholders, cooperatives have considerable room to pursue a larger role in Indonesia’s expansive palm oil industry.

Recognizing this potential, the Revolving Fund Management Agency of the Cooperatives Ministry has assured financing support for cooperatives seeking to deepen their involvement in the industry.

The support could help finance factory construction, raw material procurement, market expansion, and business management.

As more cooperatives gain access to processing facilities, opportunities will also emerge to develop higher-value derivatives, including cooking oil produced by cooperatives themselves.

The CPO plant has transformed Sejahtera’s position in the palm oil value chain. Once limited to managing plantations and supplying fresh fruit bunches, the cooperative now has a foothold in the processing industry.

The next challenge is to ensure that the factory operates sustainably and continues to grow, delivering greater added value to its members as collective owners of an evolving rural enterprise.