East Kalimantan Environmentally Sustainable Development Strategy

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farmers . We have identified several important enablers for the agricultural sector including spatial
planning, technology, farmer productivity, market access, and MRV. An agricultural transformation
depends on all parts of the agricultural system working together; while each element can improve
the agricultural sector’s production and abatement, a sustainable solution requires all elements
working together.
In order to support the growth of the agricultural sector, spatial planning should focus
on identifying several ‘breadbasket’ areas. A breadbasket strategy aims at a breakthrough
in food production in certain defined geographic areas. Breadbaskets are defined as agricultural
areas with potentially high productivity for specific food crops, good market access potential, and
relatively high rural population density. In addition, to support East Kalimantan’s goal to reduce
CO2e emissions, these breadbaskets should also be located in areas with degraded lands or
grasslands to prevent further deforestation. By identifying breadbasket regions, agricultural
expansion can be focused in the areas with highest potential as well as lowest emissions.
Nucleus-Plasma schemes (Perkebunan Inti Rakyat) are an important tool to raise yields
of smallholder estate crops located near major plantations. Nucleus-plasma programs
have been developed for palm oil plantations but could be expanded to other, high-value estate
crops. The programs work by having plantation companies develop palm oil plots for smallholders
in a ‘plasma’ area around their own plantation ‘nucleus’. The management of the plasma area is
run by a cooperative of the smallholders, which typically contracts technical functions back to the
nucleus plantation company, thus growers often work as laborers on their plots. The smallholders
receive seedlings, inputs such as fertilizers, and often a guaranteed price for their produce. These
schemes have worked in East Kalimantan, and plasma smallholders have yields twice as high as
independent palm oil smallholders. But the plasma schemes do have weaknesses as they can
interfere with traditional community management of lands (adat) as well as change traditional land
ownership patterns. Plasma schemes could be expanded to other high-value estate crops; for less
profitable estate crops, government subsidies may be needed to get private sector support for
such programs.
Capability building can be achieved by creating a limited number of aggregation units
operated by private local change agents (e.g., local entrepreneurs and farmers as well as
small warehouse operators on the post-harvest side) whom government, donors, input/off-take
companies, and banks can work with and who in turn will aggregate and extend support to lead
farmers and or farmer groups and individual smallholders on the production side. One option is to
develop Agriculture Centers that will perform three types of activities: (i) offer off-take from farmer
groups; (ii) provide inputs on credit; and (iii) provide services (e.g., tractor services, storage). Each
Agriculture Center should have a large warehouse facility. International examples suggest it could
serve farmers within a 20 km radius and work with about 200 to 300 lead farmers who would in turn
aggregate about around 5,000 smallholders overall. These centers should be placed in agricultural
breadbasket areas with sufficiently dense smallholder populations; based on current agricultural
lands, number of smallholders, and infrastructure or market access, potential pilots could be in
Kutai Kertanegara, Kutai Timur, and Penajam Paser Utara.
DRAFT
Extension services are still an important government program to supporting
smallholders, particularly in isolated regions. Private sector cooperation with farmers is often
limited to those with high-value estate crops who are located in the lowlands near plantations
and processing facilities. Thus, government extension workers are still important, particularly
to provide access to credit, seeds, and technology to smallholders growing food crops and
located in the more remote interior of East Kalimantan. Both the budget and number of extension
service workers has fallen in Indonesia; today Indonesia has roughly 6 extension service workers
per 10,000 farmers, compared to China, which has a ratio of 16 per 10,000. Moving to China’s
benchmark, East Kalimantan would need an additional 200 extension workers.