TFA Study Published: Innovate Replanting Financing Models for Oil Palm smallholder Farmers in Indonesia
Replanting of aging oil palm trees requires an investment of a staggering US$ 750 million annually for the next 25 years. The good news is that banks and investors start to realize that by improving data-driven risk analytics and streamlining loan origination it will be possible to develop a less risky, scalable, sustainable and profitable farmer financing model at lower cost.
For Tropical Forest Alliance 2020, Financial Access has conducted and published this month a study focused on the large supply-demand gap in oil palm smallholder replanting finance in Indonesia. The study has analyzed a number of smallholder financing programs developed by leading plantation companies and assessed the role of commercial banks, (impact) investors and the Government of Indonesia in this area. The findings of the study were gathered through extensive desktop analysis and interviews with senior managers and experts of some of the leading plantation companies and financial institutions in Indonesia.
More generally, this study has also reviewed the main prevailing challenges and issues related to oil palm replanting in Indonesia the perspective of smallholder farmers, plantation companies and other supply chain actors, as well as the Indonesian government.
The study can be accessed here.