The PSR initiative targets approximately 1,900 hectares of smallholder oil palm plantations in East Kutai, supported by funding from Indonesia’s Plantation Fund Management Agency (BPDP) of Rp60 million per hectare. According to an official statement from Solidaridad received by on Thursday, September 3, 2026, the program is expected to involve around 900 smallholders. The replanting process will prioritize certified high-quality planting materials to improve fresh fruit bunch (FFB) productivity while maintaining the economic sustainability of farming communities. Aging Plantations Put Smallholder Incomes Under Pressure Oil palm cultivation in East Kutai expanded rapidly from around 1999 through the early 2000s. After more than two decades, a significant portion of the plantations has now passed its optimal productive age. Aging trees can experience declining yields, creating pressure on smallholder incomes and potentially affecting the economic stability of communities that depend heavily on oil palm production. However, productivity is not the only challenge facing smallholders. Administrative requirements and land legality issues remain among the obstacles limiting access to the PSR program, particularly for independent smallholders. Solidaridad has emphasized the importance of streamlining the verification process in line with Indonesia’s Ministry of Agriculture Regulation No. 5 of 2025. A more efficient mechanism is expected to accelerate disbursement while maintaining accountability and ensuring that support reaches eligible farmers. Rp60 Million per Hectare in Replanting Support The BPDP funding allocation is expected to play a key role in rejuvenating smallholder plantations in East Kutai. With support of Rp60 million per hectare, the program will facilitate replanting activities, including the use of certified planting materials. Higher-quality planting material is expected to improve plantation productivity over the long term and strengthen the competitiveness of smallholders within the palm oil supply chain. Yeni Fitriyanti, Country Manager of Solidaridad Indonesia, said PSR should be viewed as more than simply replacing old oil palm trees. “PSR is a transformation of farmers’ economic governance. With support from BPDP funding and Ministry of Agriculture Regulation No. 5/2025, 900 East Kutai farmers are ready to become key actors in an ISPO-standard palm oil supply chain,” Yeni said. She added that improving plantation productivity needs to go hand in hand with stronger farm governance so that smallholder plantations can meet sustainability requirements demanded by global markets. Stronger Cooperatives Key to ISPO Readiness The acceleration of PSR in East Kutai also relies on closer cooperation between the central government, local authorities, farmer organizations and development partners. Solidaridad organized a workshop on strengthening independent smallholders’ access to the PSR program in East Kutai. The event brought together representatives from the Directorate General of Plantations at the Ministry of Agriculture, the East Kalimantan Plantation Agency, GPPI and 22 cooperatives supported by Solidaridad. The multi-stakeholder approach is intended to strengthen farmer organizations, which are considered an important foundation for improving access to PSR and preparing smallholders to meet ISPO certification requirements. I’im Mucharam, Director of Oil Palm and Other Plantation Crops at the Directorate General of Plantations, Ministry of Agriculture, said PSR is closely linked to the sustainability agenda for smallholder plantations. “PSR is an absolute foundation for meeting ISPO criteria. Inclusive downstream development can only be achieved if farmer organizations are strong and certified supply is secured,” I’im said. National PSR Funding Reaches Rp12.86 Trillion The East Kutai initiative forms part of Indonesia’s broader effort to strengthen the smallholder oil palm sector. From 2016 through August 2026, the PSR program had distributed Rp12.86 trillion to 187,782 smallholders covering 428,745 hectares. In 2026 alone, PSR realization had reached Rp606 billion by August, supporting the replanting of 20,229 hectares involving 10,403 smallholders. The planned replanting of 1,900 hectares in East Kutai could subsequently serve as a model for similar initiatives in other palm oil-producing regions. The collaboration between government agencies, cooperatives, farmers and development organizations is expected to accelerate plantation rejuvenation while strengthening farmers’ readiness for ISPO certification. For Indonesia’s palm oil industry, the acceleration of PSR has strategic implications beyond productivity. Replanting aging plantations can help secure future FFB supplies, strengthen smallholder incomes and improve the sustainability credentials of Indonesia’s palm oil supply chain. The East Kutai program therefore represents an effort to build a more productive, better-governed and internationally competitive smallholder palm oil sector.